* Euro on track for worst day vs dollar in 3 weeks
* Greek CDS up, bond yield spreads widen
* U.S. jobless claims increase; capital inflows rise
(Adds quotes, update prices, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 15 The euro fell against the
dollar on Thursday, snapping five straight days of gains, on
worries about how potential aid for Greece would be disbursed.
The single euro zone currency was on track for its biggest
one-day fall in three weeks versus the greenback as the cost of
insuring against a Greek default rose and the Greek/German
government bond yield spread widened to near record levels.
Although European officials agreed on Sunday to make
available 30 billion euros in loans and a further 15 billion
coming from the International Monetary Fund, there are
questions on how the rescue package would be implemented.
"There was all this talk from the capitals in Europe saying
they have to pass legislation first in order to get the loans
going," said Richard Franulovich, senior currency strategist,
at WestPac in New York. "Then Germany is saying Greece needs to
approach it before it can pass legislation. That has caused a
bit of consternation and concern."
In early afternoon trading, the euro EUR= fell 0.6
percent to $1.3564, not far from session lows at $1.3520 its
lowest in about a week, according to Reuters data. At current
prices, it was on track for the biggest daily percentage
decline since March 24.
Greece said on Thursday it is seeking talks with the EU,
the European Central Bank, and the IMF on a multi-year economic
program that could be backed by financial aid if the Greek
government were to seek such assistance. [ID:nATH005370]
That failed to soothe the market as five-year Greek credit
default swap prices rose to 455 basis points, exceeding a
record closing high of 444 basis points hit a week ago.
"The real issue for Greece is access to liquidity," said
David Pierce, director of business development at GPS Capital
Market in Salt Lake City, Utah.
"The fear is that nobody will be willing to loan anything.
Greece has almost 12 billion euros worth of bonds maturing over
the next 45 days and no money to pay the bill, which would
require them to go back to the market and raise money."
Sentiment towards the euro also deteriorated as the cost of
insuring against a Portuguese default hit its highest since
February after the European Commission on Wednesday said the
country may need additional fiscal cuts this year.
Weighing on global sovereign debt markets is the risk other
euro zone countries like Portugal or Spain suffer financing
problems like those of Greece.
Some in the market said selling by Middle Eastern names
also was helping push the euro lower against the dollar, and a
break through stop-loss orders around $1.3575 and below had
accelerated the currency's fall.
The euro EURJPY= also dropped 0.8 percent to 126.20 yen,
after earlier slipping more than 1 percent to 125.84 yen.
The ICE Futures' U.S. dollar index .DXY, which tracks the
greenback versus a basket of major currencies, rose 0.4 percent
to 80.521, recovering from a four-week low of 80.031 hit on
The dollar found support after the Treasury Department said
foreign purchases of U.S. securities rose in February as strong
private sector demand helped reverse an overall capital outflow
suffered during the prior month.
For a graphic on foreign holders of U.S. Treasuries, click
The greenback recovered from earlier losses triggered after
strong Chinese growth data ramped up speculation of a yuan
revaluation, which is seen as negative for the dollar against
Asian currencies. [ID:nBJL002018]
Against the yen, the dollar was off 0.2 percent at 93.03
yen JPY=, briefly dipping after a report showed U.S. initial
jobless claims unexpectedly soared last week. [ID:nN15325702]
Separate data on Thursday showed a gauge of manufacturing
in New York State rose to a six-month high in April, while U.S.
industrial output rose less than expected in March.
(Additional reporting by Wanfeng Zhou; Editing by Andrew Hay)