Euro drops with all eyes on Greece

The euro extended recent losses against the dollar Friday on intensifying worries over Greece's debt problems as the set the stage for a request for emergency loans, analysts said.

The European single currency fell to 1.3556 dollars in London trade from 1.3574 dollars in New York late on Thursday.

Against the Japanese currency, the dollar slipped to 92.67 yen from 93.06 yen on Thursday.

"The situation concerning Greece continues to undermine the euro," said Credit Agricole analyst Stuart Bennett.

Greek Prime Minister George Papandreou on Friday signalled that Athens is preparing to request unprecedented emergency loans from Europe and the IMF.

His comments came as European finance ministers gathered in Madrid for talks expected to focus on Greece's debt crisis and ahead of meetings in Athens with European and International Monetary Fund officials starting on Monday.

"We are making all the preparatory moves" required for a possible request, Papandreou told lawmakers in Athens, adding that activation of the financial rescue package would have to be guided by the national interest.

The three-year loans would run into the tens of billions of euros (dollars) and be granted at a preferential rate of around five percent, according to plans agreed by eurozone finance ministers earlier this month.

Analysts have said the debt trouble afflicting Greece and some other European states will hurt investor confidence in Europe.

Greece's 15 eurozone partners have said they are prepared, if asked, to provide this year 30 billion euros (41 billion dollars) in loans, with another possible 15 billion euros available from the IMF.

The bailout for Greece, which has the highest budget deficit in the euro area, would be the first time a eurozone member has to be rescued in this way.

"With talks scheduled to begin next week the issue will continue to weigh on the single currency suggesting that the rebound in the euro following the announcement of the 30 billion-euro support package will unwind further with a break below 1.3500 probable," said analyst Bennett.

In London trade on Friday, the euro was at 1.3556 dollars against 1.3574 dollars on Thursday, at 125.62 yen (126.33), 0.8769 pounds (0.8758) and 1.4331 Swiss francs (1.4340).

The dollar stood at 92.67 yen (93.06) and 1.0572 Swiss francs (1.0562).

The pound was at 1.5459 dollars (1.5498).

On the London Bullion Market, the price of gold rose to 1,155.90 dollars an ounce from 1,154.50 dollars an ounce on Thursday.

Source: AFP

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