(Updates quotes, prices)
* Euro/dollar dips from previous day's three-week high
* German, euro zone data disappoints, builds pressure on
politicans to act
* Franco-German summit starts 1400 GMT, news conference 1600
By Nia Williams
LONDON, Aug 16 The euro dipped on Tuesday,
retreating from a three-week high versus the dollar, after weak
German and euro zone growth data sparked concerns about a
slowdown and added to pressure on policymakers to act fast to
address the region's debt problems.
German data showing GDP growth slowed to 0.1 percent in the
second quarter, much less than a consensus forecast of 0.5
percent, pushed the single currency down more than 1 percent
against the safe-haven Swiss franc.
Euro zone GDP data showed the economy grew by just 0.2
percent over the same period, adding to pessimism about the
region, which is already struggling with a mounting sovereign
Market focus is now on a Franco-German summit at which
President Nicolas Sarkozy and Chancellor Angela Merkel will
discuss potential solutions to the region's debt crisis.
The two leaders will meet in Paris from 1400 GMT this
afternoon and a joint news conference is expected at 1600 GMT.
A focal point is whether there will be any signs of progress
toward the issuance of common euro zone bonds, although
officials in Paris and Berlin have said Tuesday's talks will not
address that possibility.
Analysts said while the summit would be closely scrutinised,
few in the market were expecting a concrete solution to a debt
crisis that has spread from the euro zone's periphery to the
core economies of Italy, Spain, and most recently France.
"The GDP data shows the euro zone economy is slowing very
sharply. It's not just a peripheral problem any more, it's
spreading to the core," said Lee Hardman, currency economist at
Bank of Tokyo-Mitsubishi UFJ.
"Given the escalating debt crisis in Europe there's a
pressing need for a more effective solution to be put forward
but they cannot solve the crisis between just France and
Germany. Nothing of any significance will be agreed on today."
Analysts said the euro could draw support if Sarkozy and
Merkel move closer towards a fiscal union, but the summit is
more likely to focus on fleshing out details regarding issues
such as economic governance.
The euro was last down 0.4 percent versus the dollar at
$1.4392 , with support near its 100-day moving average at
$1.4353. Sell-stops are cited below $1.4320 while on the topside
there is talk of option barriers at $1.45.
It reached a nearly three-week high of $1.4477 on Monday
when reports the European Central Bank bought 22 billion euros
of government debt last week soothed nervous investors, but
failed to break key trendline resistance around $1.4480.
The euro earlier fell more than 1 percent to 1.1178 francs
after the German GDP data, giving back some of the
gains made on Monday, when it surged roughly 2.3 percent.
It was last trading down 0.8 percent on the day at 1.1238
francs. Earlier, the Swiss National Bank declined comment on
market talk that it was checking rates in the forward
The Swiss franc had slid against the dollar and the euro on
Monday on speculation the SNB may soon take drastic measures to
curb gains in the currency by setting a cap on the Swiss
currency and pegging it to the euro.
Analysts said the SNB was likely to take further steps to
dampen the franc, as they have done in the past, but the
authorities would struggle to stem the tide of safe haven flows
as investors sought refuge from the euro zone crisis.
"People are buying the Swiss franc because they are looking
at the euro zone and do not know what is going on," said Simon
Derrick, head of currency research at Bank of New York Mellon.
The dollar fell 0.3 percent against the Swiss
franc to 0.7817 francs , but remained well above a record
low of 0.70676 hit last week on trading platform EBS.
Efforts by Swiss authorities to stem the Swiss franc's rise
have stirred talk that the yen may end up becoming the safe
haven currency of choice, if market tensions flare up again.
The dollar held steady against the yen at 76.77 yen ,
having dropped back to levels seen before Japan's record
yen-selling intervention on Aug. 4, and hovering near a record
low of 76.25 yen hit in March.
(Editing by Catherine Evans)