* Euro falls after German Ifo disappoints
* Uncertainty on Spain, Greece also undermines euro
* Yen helped by repatriation ahead of Sept 30
By Anirban Nag
LONDON, Sept 24 The euro fell on Monday after a
leading survey of German business sentiment disappointed, and
uncertainty over Spain and Greece was also likely to undermine
the single currency.
Spanish government bond yields rose on signs that Madrid is
making slow progress towards asking for the international
bailout that markets are anticipating, pushing Italian yields
higher with it.
The euro fell 0.6 percent to a session low of $1.2902
, with bids from large Asian investors cited around
$1.2850. The single currency was last trading at $1.2915, but
has shed more than 1.5 percent from a four-month peak of $1.3173
reached on Sept. 17.
Initial support is seen at $1.2905, the 23.6 percent
retracement of the July to September rally, followed by its
200-day moving average, which comes in around $1.2828.
The Munich-based Ifo think tank said on Monday its business
climate index, based on a monthly survey of some 7,000 firms,
fell to 101.4 in September from 102.3 in August. A Reuters poll
of 45 economists had forecast a slight rise to 102.5.
"The euro has fallen after the German Ifo numbers, but this
has to be taken in the context as part of the survey was done
before the German constitutional court ruling," said Chris
Walker, currency strategist at UBS.
Germany's constitutional court gave its approval on Sept. 12
for the euro zone's bailout fund to go ahead, boosting the euro.
Ifo economist Klaus Wohlrabe said 50 percent of the Ifo survey's
responses were taken before the court's decision.
"In the near term, what happens to the euro is very much
contingent to when Spain applies for a bailout. So far they are
resisting," Walker added.
Madrid is expected to present its draft budget plan for 2013
later this week and announce new structural reforms, while the
results of stress tests on the wobbly Spanish banking sector are
also due. These could set the stage for a full-scale bailout.
However, Economy Minister Luis de Guindos said on Saturday
that Spain will not rush to seek external aid to finance its
debt, and EU officials said they did not expect Prime Minister
Mariano Rajoy to seek an assistance programme before a regional
election in his native Galicia on Oct. 21.
Adding pressure for Spain to seek aid is a credit review by
ratings agency Moody's expected this week, as well as a 27.5
billion euro refinancing hump at the end of next month. Moody's
could downgrade Spanish debt to junk status, although the agency
has said it would welcome a Spanish aid request.
"What makes today's markets difficult is that a downgrade
could actually prompt Spain to seek aid, which would be positive
for the euro," said Katsunori Kitakura, associate general
manager of market making at Sumitomo Mitsui Trust Bank.
Greece meanwhile has yet to secure a deal on an austerity
package w ith its international lenders.
An EU/IMF report into whether Greece's debt is manageable,
originally expected next month, now looks set to be delayed
until after Nov. 6.
INTERVENTION JITTERS FOR YEN
Nevertheless, euro zone leaders were discussing leveraging
the bloc's new permanent bailout scheme, a senior German
official said on Monday. Spiegel magazine reported in its latest
edition that the euro zone wanted to leverage the rescue fund
for a total capacity of more than 2 trillion euros.
Traders say this is likely to support the euro, which has
rallied since late July, driven mainly by the European Central
Bank's bond-buying pledge and the U.S. Federal Reserve's
Data on Friday from U.S. derivatives watchdog CFTC showed
that speculators' net euro short positions shrank to their
lowest level since November, having fallen to just above
one-third of the record peak, reached in June.
Against the yen, the euro slipped to as low as 100.75 yen
, its lowest level in 10 days.
The dollar also dipped 0.2 percent to 77.98 yen, with
traders citing Japanese repatriation flows before the financial
half-yearly closing as helping the yen.
The dollar has support at 78.00 yen as traders are wary
Japan might intervene in the market should the yen gain further.
The Bank of Japan's easing last week is seen as paving the way
for such a move.