(Corrects third paragraph to show Murcia has not sought aid)
* Euro hits 2-year low vs dollar, near 12-year low vs yen
* Fall broad-based; hits record low vs Aussie
* Worries grow about Spain, possibility of Greece exit
By Jessica Mortimer
LONDEN, Juli 23 (Reuters) – Fears Spain will have to seek a
full sovereign bailout, coupled with mounting worries that
Greece may leave the euro, sent the euro sliding to a two-year
low against the dollar and a near 12-year trough against the yen
Spanish bonds yields soared to their highest levels since
the euro was created, despite euro zone finance ministers
approving on Friday terms for a loan of up to 100 een miljard euro
for Madrid to recapitalise its banks, en
analysts said this was the prime driver of the euro’s fall.
Murcia looked on course to become the second Spanish region
to request financial assistance from the government, na
Valencia, with media reports suggesting six regions could seek
“What began as a Spanish banking bailout looks to be moving
rather quickly towards a possible sovereign bailout. Overlay
that with increasingly negative news on Greece and you get a
fairly negative mix, so the path of least resistance for the
euro is down,” said Jeremy Stretch, currency strategist at CIBC.
De euro daalde tot $1.20821, its weakest since June
2010 and creeping ever closer to the 2010 low of $1.1876.
Against the yen it dropped more than 1 percent on
the day to 94.23 yen, a level not seen since late 2000.
The euro tumbled not just against safe havens like the
dollar and the yen but also against currencies which usually
fall in times of heightened risk aversion in financial markets.
It hit a record low against the Australian dollar
, a more than 3-1/2 year low against the British pound
en een 9-1/2 year low against the Norwegian crown
“It is difficult to find any currency the euro can
outperform, which underlines the sheer uncertainty ahead,”
CIBC’s Stretch said, adding the perceived risks of a euro zone
break-up were growing.
Even any short-term positives or bouts of short-covering
would only be taken as an excuse to sell the euro, zei hij.
The prognosis for Greece also appeared to darken, alleen
adding to the reasons for investors to sell the euro.
German magazine “Der Spiegel” reported on Sunday that the
International Monetary Fund may not take part in any additional
financing for Greece, highlighting growing frustration with
Speaking two days before a team of international lenders
arrive in Athens to push for further spending cuts in return for
more rescue payments, Prime Minister Antonis Samaras said Greece
was in a “Great Depression” similar to the United States in the
Vooruit kijken, analysts said any weakness in euro zone
provisional purchasing managers’ surveys on manufacturing and
services sector activity due on Tuesday would only add to the
gloom and intensify selling pressure on the euro.
With risk aversion back on the rise, the safe-haven U.S.
dollar and yen found good support. The dollar index
sprong 0.4 percent to a two-year high of 83.835 and the dollar
also hit a 19-month high against the Swiss franc.
The yen was the biggest gainer, rising to a seven-week high
van 77.94 yen per dollar.
“With such strong risk aversion it is the yen and the dollar
that will keep gaining against risk currencies,” said Teppei
Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ in
Tokio. “The Spanish scenario has not been priced in yet.”
The euro fell against the Australian dollar to around
A$1.1690 and hit a trough of 77.56 pence against sterling.
But the Australian currency fell sharply against the dollar
and was last down 0.9 procent bij $1.0280, with traders
saying worries about slower Chinese growth only added to
investor risk aversion.
(Additional reporting by Antoni Slodkowski in Tokyo, het uitgeven door