September 28, 2011 / 3:00 PM / 6 years ago

CORRECTED-FOREX-Euro gains 4th day vs dlr on Greece

 (Corrects day of Finnish vote to Wednesday in third
paragraph)
 * Greece lenders to resume mission on Thursday
 * Month and quarter-end refinancing could favor euro
 * Investors await Fed Chairman Bernanke speech
 (Updates prices, adds quotes and graphics, changes byline
and dateline; previous LONDON)
 By Julie Haviv
 NEW YORK, Sept 28 (Reuters) - The euro rose for the fourth
straight day against the dollar on Wednesday on cautious
optimism Greece's lenders will allocate the bailout funds
necessary for it to avoid a near-term default.
 While the euro briefly turned negative against the dollar
as U.S. stocks fell, the euro was supported also by data
showing inflation in Germany ticked up, which should ease
pressure on the European Central Bank to lower rates.
 EU and IMF inspectors return to Greece on Thursday to
decide whether Athens has done enough to secure a new batch of
aid vital to avoid bankruptcy, while Germany suggested a new
bailout may have to be renegotiated. For story see
[ID:nL5E7KSOAC]
 Finland on Wednesday voted to grant additional powers to
the euro zone bailout fund, giving support to the euro. The
proposal, which euro zone leaders agreed to in July, needs to
be approved by the parliaments of all the euro zone nations.
 "With 10 of the 17 member eurogroup having ratified a
bailout fund, there is no question that Europe is clearing each
hurdle slowly and inching closer to a broader and more
ambitious plan to expand their resources and prevent
contagion," said Kathy Lien, director of currency research at
GFT Forex.
 In New York trade, the euro was up 0.1 percent at $1.3606,
but down from a one-week high of $1.3690 hit in the overseas
session in which a U.S. investment bank was cited as a large
buyer.
 If European policymakers do not acknowledge that a Greece
deal is in the works quickly, the relief rally could come to an
end, Lien said.
"Although currencies and equities have held on to their
gains, the price action in the market suggests that the
patience of investors is wearing thin," Lien said.
 Fears of near-term Greece default and its impact on
Europe's banking system is largely behind the euro's 5.2
percent slide against the dollar this month.
 Ongoing talk of proposals to leverage up the region's 440
billion euro rescue fund -- the European Financial Stability
Facility -- fuelled demand for riskier assets on Tuesday.
[ID:nL5E7KR2MH]
 But media reports suggested a split had opened within the
euro zone over Greece's bailout terms, highlighting one of the
many hurdles lying ahead for policymakers trying to resolve the
debt crisis. [ID:nL5E7KS00J]
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
  For more news on euro zone crisis          [ID:nL6E7HL0JK]
  For Euro Zone Crisis page  link.reuters.com/jyr68r</A1
>
  For an Interactive timeline
link.reuters.com/rev89</A1 >
  Insider TV link.reuters.com/taq93s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Given the euro's losses this month, market participants
said risky assets would be supported this week by demand from
money managers adjusting their portfolio weighting to
compensate for the fall in value of some assets.
 "After the weekend when there was talk about leveraging the
EFSF to around 2 trillion euro, markets have gone marginally
more risk seeking," said Jeff Kendrew, currency strategist at
Nomura.
 "You've got that and month-end and quarter-end refinancing
flows which are positive for the euro given its sell-off this
month."
 The dollar slipped 0.4 percent to 76.46 yen JPY=, not far
from a record low of 75.941 hit in August on trading platform
BS. Traders cited heavy system fund stops layered under 75.90
yen and real money stops under 75.70 yen.
 Investors awaited a speech by Federal Reserve Chairman Ben
Bernanke later in the day to see if he offers some reaction to
the market's mostly negative response to last week's Operation
Twist by the U.S. central bank.
 Any hint that even more monetary easing is possible could
help underpin risk appetite, which may further boost the euro
to the detriment of the dollar.
 (Additional reporting by Nia Williams, Neal Armstrong and
Naomi Tajitsu, Editing by Chizu Nomiyama)


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