(Reuters) - The euro dipped on Friday and languished near a one-week low as hopes dimmed that a European Union summit would make substantial progress toward containing the euro zone debt crisis. The euro and the Australian dollar came under pressure after European leaders failed to reach an agreement on giving a banking license to the euro zone's permanent bailout fund, the European Stability Mechanism (ESM), limiting its firepower. "There was disappointment... It means they don't have access to ECB money," said Jesper Bargmann, Asia head of G11 spot FX for RBS in Singapore, referring to the ESM. Bargmann said the euro was unlikely to "collapse" as many market players were already short the currency, but added that the Australian dollar could come under further selling pressure after breaching an important technical level at the $1.0150/60 area. A banking license for the ESM would give the bailout fund access to European Central Bank liquidity lines, bolstering its ability to tackle the euro zone debt crisis. The euro dipped to as low as around $1.3309 at one point, nearing a one-week low of $1.3289 hit on Thursday. It later pared losses to stand at $1.3325, down 0.1 percent from late U.S. trade on Thursday. The Australian dollar, a barometer of investor risk appetite, fell 0.7 percent to $1.0095. The euro had come under pressure the previous day after the European Central Bank poured cold water on hopes it will buy up more bonds of debt-laden euro zone states, a step some deem essential to containing the debt crisis. Key downside support for the euro lies at its November trough of $1.3213 and then at its October low near $1.3145. EU leaders agreed stricter budget rules for the euro zone on Friday, but failed to secure changes to the EU treaty among all 27 member states, meaning a deal will instead have to involve just euro zone states and any others that want to join. Summit talks among European leaders are set to resume later on Friday, and market players said there were some positive elements from decisions that have been announced so far, including expectations that EU countries would provide up to 200 billion euros in bilateral loans to the International Monetary Fund (IMF) to help it tackle the crisis. "I think it looks like there's a little more meat to this now. There will be an agreement, it will be signed by the whole of the eurozone...and it looks there's more money for the IMF," said Rob Ryan, FX strategist for BNP Paribas in Singapore. "Still lots of questions remain though - chief among them is implementation risk," Ryan added. The various headlines on the EU summit had little impact on the dollar's moves against the yen. The dollar was changing hands at 77.59 yen, down 0.1 percent from late U.S. trade on Thursday. (Additional reporting by Antoni Slodkowski and Hideyuki Sano in Tokyo; Editing by Kim Coghill)

Source