Euro flat amid Greek debt contagion fears

TOKYO: The euro was flat against the dollar in Asian trading Thursday, after tumbling on fears over contagion from Greece's deepening debt woes, dealers said.

The single currency plunged Wednesday after eurozone finance ministers failed to bridge their differences over a second debt bailout plan for Greece, against a backdrop of violent anti-government protests.

In Tokyo morning trade, the euro was unchanged from late New York Wednesday at $1.4182. The European common currency fetched 114.78 yen, little changed from 114.80 yen.

The dollar was flat at 80.93 yen against 80.92 yen.

Euro sentiment took a hit after ratings agency Moody's warned it may downgrade major French banks Credit Agricole, BNP Paribas and Societe Generale because of their exposure to Greek debt, dealers said.

The announcement came after European finance ministers failed to agree on the terms of an eventual second bailout for Greece to avert a possible default after talks in Brussels late Tuesday.

Greek Prime Minister George Papandreou Wednesday announced a government reshuffle after sweeping anti-austerity protests in Athens ahead of a key vote on new belt-tightening reforms.

"Moody's announcement was a blow to the euro, as vague worries in the market about the Greek debt problem may materialise in the form of a credit crunch hitting European financial institutions," said Dai Sato, dealer at Mizuho Corporate Bank.

"The euro showed slight resilience against the dollar in early trade but its underlying weakness remains unchanged," Sato said.

"When describing investor sentiment on Greece, 'panic' is the right word," a senior dealer at a major bank in Tokyo told Dow Jones Newswires.

The erosion of risk appetite sent global stock markets lower. Tokyo's benchmark Nikkei average lost 0.84 percent in morning trade.

"Concern over the US economic slowdown has raised risk-off mood among investors, leading to stock markets' slump and unwinding of previous purchases of higher-yielding and risk currencies against the dollar," Sato said.

Copyright AFP (Agence France-Presse), 2011