WSJ:WORLD FOREX: Euro Gives Up Gains, Report Of IMF Aid To Italy In Doubt
-- Euro gives up much of earlier gains as doubts arise over report of IMF aid for Italy
-- People familiar with discussions on European debt crisis say the report not credible
-- Solid kick-off of U.S. shopping season supports riskier assets, like euro
By Kosaku Narioka
Of DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- The euro gave up much of its gains made earlier Monday in Asia, as doubts emerged over a report that the International Monetary Fund may offer financial support to Italy.
The euro rose earlier in the day on expectations for bolder action from the international community to fix the euro-zone crisis.
A daily newspaper in the Italian city of Turin cited IMF sources Sunday as saying the fund could offer Italy between EUR400 billion and EUR600 billion in financial support. That would give Italian Prime Minister Mario Monti a window of 12 to 18 months to enact reforms to restore waning market confidence in Italy's ability to repay its debt.
However, people familiar with international discussions on the European debt crisis told Dow Jones Newswires on Monday that the report wasn't credible.
"I think it is baseless," one of them said. "There has been no talk on something like that among (Group of Seven) authorities."
The euro lost nearly 50 pips versus the dollar within a few minutes after the Dow Jones headlines hit the wire.
"We knew the euro was going to fluctuate based on headlines like these," said Tomohiro Nishida, senior dealer at Chuo Mitsui Trust and Banking.
Still, the risk-sensitive euro didn't give up all its gains, as the common currency was supported by a solid kick-start to the U.S. shopping season, helping risk sentiment, Tokyo dealers said.
The retail-data and consulting firm ShopperTrak said Saturday that Black Friday sales rose 6.6% from a year ago.
Separately, European Central Bank governing council member Christian Noyer said Monday that an increase in the European Financial Stability Fund would be unrealistic, but he is open to any scheme that would allow existing commitments to be leveraged to provide greater intervention capacity.
There was little reaction to the comments, however, as they were largely in line with what he has said in the past, and with market expectations, dealers said.
The euro was at $1.3283 as of 0450 GMT, after rising to a session high so far at $1.3344, from $1.3246 late Friday in New York, and was at Y103.17 from Y102.89, according to EBS.
The dollar was at Y77.64 from Y77.76 and was at CHF0.9289 from CHF0.9315. Sterling was at $1.5497 from $1.5440.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at about 79.341 from 79.611.
Market participants continue to focus on European bond yield movements with auctions by Italy, Belgium, and France scheduled later in the day.
Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
