* Euro steadies after half-cent drop, yen higher overnight
* Little sign of sharp equity sell-off passing through as
* But stock market tensions fuel arguments for change in
(New throughout, changes dateline from previous SYDNEY/TOKYO)
By Patrick Graham
LONDON, July 11 Major currency markets were
steady in Europe on Friday, having ridden out a day of ructions
on European stock markets with only minimal moves on the euro
Strategists were sceptical of whether concerns about
Portuguese bank BES would prove the trigger for
an immediate change in market tone away from the steady, low
volatility plays of the past six months.
But Thursday's 4 percent slide in Lisbon shares and the
losses it brought with it for other European banks supported
those who have been warning for the past month or so that there
is a bubble in stock and some bond prices that may soon burst.
The main currency candidate to suffer from any such move
would be the euro, which has benefited from a flood of money
into markets in the euro zone's indebted southern half over the
"I don't think you can look at BES and say it's the start of
something, but it is a symptom of what seems to be happening,"
said Simon Derrick, head of global FX strategy with Bank of New
York Mellon in London.
"All of the reasons for owning the euro over the past year
are steadily being taken away. That doesn't mean euro-dollar is
going to shift straight away but it does look increasingly
likely that a move is in the pipeline."
The euro fell half a cent against the dollar on Thursday - a
very ordinary daily move. It was flat at $1.3607 in early
European trade on Friday.
The yen was poised to end the week higher on Friday, having
jumped to a five-month peak against the euro overnight on the
sell-off in global equities.
The euro last traded at 137.79 yen, having fallen
as far as 137.50, its lowest since early February.
The dollar was at 101.35 yen after touching a
seven-week low of 101.06. The Aussie fetched 95.09 yen
, following a dip to a five-week low of 94.66.
"Treasury yields and U.S. and Japanese monetary policies
remain drivers of the yen," said Masashi Murata, senior currency
strategist at Brown Brothers Harriman in Tokyo.
"The Portuguese banking woes did strengthen the yen, but I
see this more as a result of the dollar being sold as Treasury
The Treasury 10-year note yield briefly fell to a five-week
low of 2.494 percent on Thursday before pulling back
above 2.500 percent.
(Additional reporting by Ian Chua and Shinichi Saoshiro,
editing by John Stonestreet)