TOKYO: The euro steadied against the dollar in Asia on Friday but sentiment remained sour after Spain and France faced a sharp spike in borrowing costs as eurozone sovereign debt fears deepened.
The euro traded at $1.3468 and 103.66 yen in Tokyo trade against $1.3457 and 103.60 yen in New York late Thursday.
The dollar was flat at 76.96 yen compared with 76.98 yen.
Aggressive euro selling took a
pause in Asian trade. The current sell-off feels like "it may just be a
little bit over done in the near term," BNZ FX Strategist Mike Burrowes
told Dow Jones Newswires.
Everyone is "bearish euro and
talking about European breakups and bailouts and it feels like the news
is all very negative," Burrowes said.
Investor concerns over the
debt crisis gained momentum overnight in the wake of troubled new
Spanish and French bond issues and rising borrowing costs for
under-pressure countries such as Italy to dangerously high levels.
In a poorly received auction, Spain's treasury had to pay a record 6.975 percent when it raised 3.6 billion euros in a sale of 10-year bonds.
France,
the eurozone's second-largest economy, also was forced to pay sharply
higher rates to raise 7.0 billion euros in new bond sales.
"Spanish and French
government bond auctions Thursday provided little reason for euro
optimism," Credit Agricole strategist Adam Myers said in a note to
clients, adding that "they indicated a growing level of market stress".
Despite new governments taking over in Italy and Greece
to push through key reforms, Italian benchmark 10-year bond yields once
again topped 7.0 percent, a level considered as unsustainable.
In Italy, Prime Minister Mario Monti laid out radical economic reforms on Thursday aimed at cutting Rome's huge debt mountain, boosting growth and preventing Italy from dragging down the eurozone.
Fears of that the debt crisis may engulf bigger economies in the continent sent global stocks sliding.
The euro may remain
downwardly biased against the dollar given ongoing worries about the
eurozone sovereign debt crisis, said Osao Iizuka, head of FX trading at
Sumitomo Trust and Banking.
Copyright AFP (Agence France-Presse), 2011
