* 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 and
looked vulnerable to further losses after a weaker-than-expected
German business sentiment survey raised concerns the euro zone's
biggest economy could slip into recession.
Uncertainty over Greece and Spain also undermined the single
currency. Spanish 10-year government bond yields hovered just
under 6 percent on signs that Madrid is making slow progress
towards asking for the international bailout that markets are
The euro fell 0.6 percent to a session low of $1.2896
, with bids from large Asian investors cited around
$1.2850. It has shed more than 1.5 percent from a four-month
peak of $1.3173 reached on Sept. 17.
Technical analysts cited support around the 200-day moving
average, which comes in around $1.2828.
The Munich-based Ifo think tank said 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 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.
"In the near term, what happens to the euro is very much
contingent on when Spain applies for a bailout. So far they are
resisting," Walker added.
Madrid is expected to present its 2013 draft budget plan
later this week and announce new structural reforms. The results
of stress tests on the Spanish banking sector are also due.
These could set the stage for a full-scale bailout although
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.
"It will become more of an issue (for the euro) if we do not
start to make clear progress towards Spain ticking the boxes and
unlocking the asset purchase programme from the ECB," said Adam
Cole, global head of FX strategy at RBC Capital Markets.
Under a plan announced by European Central Bank President
Mario Draghi last month, the ECB will be able to buy the bonds
of indebted countries once they apply for a bailout.
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, is likely to be delayed until after Nov. 6.
INTERVENTION JITTERS FOR YEN
Discussions are going on in Europe about leveraging the euro
zone's new permanent bailout scheme, German Deputy Finance
Minister Steffen Kampeter said on Monday. Spiegel magazine
reported 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 ECB's bond-buying
pledge and the U.S. Federal Reserve's additional easing.
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 100.60 yen
, its lowest level in 10 days.
The dollar also dipped 0.1 percent to 78.03 yen, with
traders citing Japanese repatriation flows before the financial
half-yearly closing as helping the yen.
Traders are wary Japan might intervene in the market should
the yen gain further. The Bank of Japan's easing last week was
seen as paving the way for such a move.