By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The euro moved slightly lower versus rivals in range-bound trade Thursday as signs of a split between France and Germany dented hopes an upcoming summit will produce a convincing plan to contain Europe’s sovereign debt crisis.
The euro EURUSD +0.51% slipped to $1.3729 versus the dollar, down slightly from $1.3745 in North American trade late Wednesday. The shared currency traded at 105.38 yen EURJPY +0.62% against the Japanese unit from ¥105.44.
French President Nicolas Sarkozy on Wednesday jetted unexpectedly to Frankfurt — as his wife, Carla Bruni, was about to give birth to their first child — to hold talks with German Chancellor Angela Merkel, International Monetary Fund Managing Director Christine Lagarde and other top officials gathered at the city’s old opera house for a farewell celebration for European Central Bank President Jean-Claude Trichet.
Officials offered no assessment of the talks. News reports said they centered on disagreements over how to boost the firepower of the 440 billion euro ($600 billion) European Financial Stability Facility.
France reportedly continued to push for leveraging the fund through the European Central Bank, a move opposed by the ECB and Germany.
Other proposals have centered on using the EFSF to provide insurance against initial losses on government bonds, a move that many economists have criticized as likely increasing the threat to France’s triple-A credit rating. Euro-zone leaders are set to meet Sunday in Brussels in an effort to come up with a comprehensive plan to address the debt crisis.
“It seems safe to say that aside from the reservations everyone in markets has about using the EFSF as a first-loss insurer in order to boost its firepower, delivering a comprehensive package of proposals to ‘save Europe’ isn’t proving too easy,” said Kit Juckes, head of foreign exchange at Societe Generale.
He expects nervousness to feed weakness in the euro as the weekend approaches and remains short the euro versus the dollar with a stop at $1.3930 and a target of $1.31.
The dollar index DXY -0.32% , which tracks the U.S. unit against a basket of six major rivals, edged up to 77.198 from 77.152 Wednesday.
The British pound GBPUSD +0.14% fell to $1.5724 versus the dollar, down from $1.5758.
The U.K. Office for National Statistics said retail sales rose by 0.6% in September. Economists had forecast a flat reading.
The data was tempered, however, by a downward revision to August data, showing a 0.4% drop versus a previous estimate of a 0.2% decline. Third-quarter retail sales volumes declined 0.2% compared to the second quarter, even with the September spike, said Howard Archer, chief U.K. economist at IHS Global Insight.
The dollar USDJPY +0.03% fetched 76.76 yen, little changed from ¥76.79 on Wednesday.
William L. Watts is a reporter for MarketWatch in Frankfurt.
