LONDON: Sterling hit a two-month low against the euro on Tuesday as the single currency was buoyed by robust investor demand for Irish and Greek government paper, which eased concerns about euro zone peripheral sovereign debt. Ireland sold 1.5 billion euros in an auction of 2014 and 2017 bonds, at the top of its target range, with yields well below those seen for the bonds in the secondary market. Greece sold 390 million euros of 3-month T-bills with foreign investors buying about 72 percent of the paper, the country's debt agency said. "The auction results are providing the euro with broader support," said Ian Stannard, senior currency strategist at BNP Paribas. "Euro/sterling has been one of the star performers." The euro rose to a two-month high of 84.68 pence, up 0.7 percent on the day after stops were triggered initially above 84.16 pence and then 84.50 pence, traders said. Technical analysts at Commerzbank saw further upside for the pair. "We look for a sustained move above 84.00 shortly. Above here will target the July 85.32 high," they said in a note. Earlier, the UK currency was pounded versus the Swiss franc on selling by speculative accounts and merger and acquisition flows. It was last down 0.4 percent at 1.5554. Trade-weighted sterling hit a 2-month low of 80.9. The pound sagged briefly after data that showed UK public sector net borrowing at an August record high as interest payments on gilts shot up because of higher inflation. Sterling fell 0.2 percent to $1.5524 but was supported by Asian account buying, traders said. Market players largely squared dollar positions after selling the greenback the previous day on speculation the U.S. Federal Reserve would flag the need for future monetary easing at a policy-setting meeting later on Tuesday.

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