Euro pares losses in London

The euro cut losses against the dollar on Wednesday as risk appetite was lifted by China cutting banks' reserve requirement ratios, although traders said euro gains are likely to be limited by concerns about the region's debt crisis. China's central bank cut the reserve requirement ratio for its banks for the first time in nearly three years in a bid to ease credit strains and shore up activity in the world's second-largest economy.
The euro was last trading flat on the day at $1.3326, with traders citing stops above $1.3350 and many looking to sell the single currency on the latest rebound. On the downside, market players were focused on a big options barrier seen around $1.3250, which could pull the euro lower later in the day. The growth-linked Australian dollar was up 0.3 percent at US $1.0057 after triggering reported stop loss orders around US $1.0020. Other commodity currencies like the New Zealand and Canadian dollars also rose. The euro pulled away from a session low of $1.3259, plumbed after concerns about the eurozone debt situation were highlighted by comments from Italy's markets regulator, who said the currency bloc was at risk of breaking up if the European Central Bank's role in the debt crisis remains unchanged.
The euro had already come under pressure from investors unconvinced that plans announced the previous day to ramp up the firepower of the eurozone debt rescue fund would be enough to prevent the region from financial disaster. Traders expect a choppy session driven by demand from investors to rebalance their portfolios at the end of a volatile month which has seen the euro shed more than 4 percent versus the dollar.
The dollar index pared gains following the China reserve requirement ratio cut and was last almost flat at 78.943, holding within sight of a seven-week high hit on November 25. Meanwhile, the euro also rose 0.2 percent versus the Swiss franc to 1.2285 francs. It was supported by a lower-than-expected Swiss KOF economic barometer that suggested the export-dependent economy will slow to a crawl and could fuel demands for the Swiss National Bank to raise the floor in euro/Swiss.