By William L. Watts , MarketWatch
LONDON (MarketWatch) -- The U.S. dollar was higher versus most major rivals Wednesday, with a rebound by the European single currency stalling amid talk Spain may soon require a financial rescue, despite denials by Madrid.
"Fears are rising that Spain could soon be a source of a negative shock," and such anxieties suggest the euro could have a tough time making further gains in the near term, said Jane Foley, research director at Forex.com.
The euro (CUR_EURUSD 1.2271, -0.0048, -0.3896%) traded at $1.2276 in recent action, down modestly from $1.2338 in North American trade late Tuesday.
Not for the first time in recent days, the Spanish Finance Ministry on Wednesday denied that a bailout package is being prepared. The denial came in response to a report in the Spanish daily newspaper El Economista, which said the European Union, the International Monetary Fund and the U.S. Treasury have come up with a plan to extend a 250 billion euro ($355 billion) credit line to help Spain deal with financing problems. Read about Spain.
IMF Managing Director Dominique Strauss-Kahn is scheduled to meet Spanish Prime Minister Jose Luis Zapatero on Friday. The IMF has also denied there is a bailout plan in the works.
Spanish government bond yields rose Wednesday, with the premium demanded by investors to hold Spanish 10-year bonds over their German counterparts widening to an all-time high of nearly 2.24 percentage points from around 2.11 percentage points the previous day.
The dollar index (DXY 86.31, +0.33, +0.39%) , which tracks the greenback against a basket of major rivals, rose to 86.165, up from 85.985.
The British pound (CUR_GBPUSD 1.4767, -0.0033, -0.2230%) slipped to $1.4794, down slightly from $1.4818 late Tuesday.
Labor market data offered a mixed bag, economists said.
The number of British workers claiming jobless benefits in May fell by a larger-than-expected 30,900. Economist had forecast a drop of 20,000. But the unemployment rate in the three months ending in April rose to 7.9% from 7.8% in the previous three months. Read about British unemployment data.
The dollar was slightly lower versus the Japanese yen (CUR_USDYEN 91.3000, -0.2300, -0.2513%) , changing hands at ¥91.34 versus 91.49 late Tuesday.
