By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The dollar gained ground versus the European single currency and most other major rivals Thursday amid signs of increasing tensions within the euro zone over an aid plan for the debt-strapped Greek government.
The euro fell in Asian trade and remained under pressure in recent action, declining to $1.3675 versus the dollar from $1.3735 in North American trade late Wednesday. The euro slipped 0.4% versus the Japanese currency to 123.47 yen.
"Events in the E.U. with regard to Greece are driving price action and merit close attention in the wake of euro selling in the Asian time zone as talk flares up that Greece will resort to IMF aid over Easter," said Kenneth Broux, market economist at Lloyds TSB.
A senior Greek official told Dow Jones Newswires that the prospect of help from the European Union "doesn't look good" and that Greece could seek IMF help over the April 2-4 weekend if a more detailed aid plan isn't produced at an E.U. summit on March 25-26.
The report comes amid signs Germany and other euro-zone countries are moving more in favor of an IMF role in providing any needed aid to Greece amid public opposition to a taxpayer funded bailout for a euro-zone partner. Read more about Greek debt concerns.
Greek Prime Minister George Papandreou told reporters in Brussels that Greece would prefer E.U. measures but that the International Monetary Fund remained an option.
"This dispute between Germany and Greece is obviously a hardball game at the highest level," wrote economists at KBC in Brussels. "This open rift is of course no support for the single currency. So, as long as this dispute is dominating the financial headlines, the risk should be put for more pockets of euro weakness."
The British pound traded at $1.5279, down from $1.5315.
Sterling trimmed its loss after data showed U.K. government borrowing came in below forecasts in February, indicating the full-year deficit is likely to undershoot the government's projection of more than 12% of gross domestic product. Read about the U.K. deficit.
The dollar slipped versus its Japanese counterpart in Asian trade but then regained its footing to change hands at 90.24 yen, little changed from 90.26 yen late Wednesday.
"With the global recovery story still on track and with the [Bank of Japan] under pressure to do something on deflation, we didn't feel any need to be engaged in yen long exposure at this stage," the KBC economists wrote.
The dollar index (DXY 79.10, +0.36, +0.45%) , which measures the U.S. unit against a trade-weighted basket of six major currencies, traded at 79.963, up from 79.734.
