Bloomberg News

Euro Holds Drop on Greek Debt Talks, Before Portuguese Auctions

February 01, 2012

Feb. 1 (Bloomberg) -- The euro maintained a two-day decline as Greece struggles to conclude debt-swap talks with creditors by the end of this week.

The 17-nation currency was 0.3 percent from a one-week low versus the yen before Portugal sells bills today amid concern the nation will follow Greece in needing more aid to avoid default. A report due today may show China’s manufacturing industry shrank last month.

“The euro is still going to suffer for the first half of this year,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. “There’s some negativity while we await the outcome of the Greek swap deal.”

The euro traded at $1.3090 as of 7:59 a.m. in Tokyo from $1.3084 in New York yesterday when it slid 0.5 percent. The common currency was little changed at 99.88 yen after touching 99.55 yesterday, the lowest since Jan. 23. The dollar bought 76.31 yen from 76.27.

Greek Premier Lucas Papademos said yesterday he wants to bring the negotiations “to a successful conclusion by the end of the week” on a debt-swap agreement with Greece’s creditors. He would try to meet German-led demands for a bigger debt writedown by investors and deeper budget cuts by his government, Papademos said.

Portugal will sell 105-day and 168-day bills today. Standard & Poor’s increased the number of Portuguese banks on “creditwatch negative” after it cut the sovereign rating of the country. Yields on Portugal’s two-year notes soared to a record 21.82 percent yesterday.

A purchasing managers’ index in China probably fell to 49.6 last month from 50.3 in December, according to the median of economist estimates in a Bloomberg News survey before the the China Federation of Logistics and Purchasing releases the figures today. A reading below 50 indicates contraction.

--Editors: Jonathan Annells, Benjamin Purvis

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.


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