Euro weakens on reluctance to support Greece

The euro dropped against the dollar for a second day on speculation the European Union may be reluctant to help Greece as the country struggles to bolster its finances.

The euro also weakened versus the Swiss franc and the pound after Italy's news reports cited European Central Bank policy maker Juergen Stark as saying markets cannot assume other members of the currency region will bail out Greece.

The euro dropped to $1.4307 in London, from $1.4365 in New York. It traded at 131.71 yen, from 131.75 yen.

"This means heightened uncertainty," said Antje Praefcke, a currency analyst at Commerzbank in Frankfurt. There is "fear that Greece will default and that other countries like Spain and Ireland will follow".

Meanwhile, the US dollar rose against the yen yesterday, recovering from Tuesday's sharp fall, as Japanese investors picked up overseas assets at the start of the new year in otherwise choppy trade ahead of US jobs data later this week.

The dollar was also helped by other currencies rebounding sharply against the Japanese unit after the liquidation of yen selling positions that had been accumulated in the previous few weeks finished.

 

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