* Euro/dlr falls 0.8 pct on Greece concerns
* Dollar initially rises after JPMorgan Q4 earnings
* Euro hit by rumour, later denied, of Merkel resignation
(Adds comment, updates prices)
By Neal Armstrong
LONDON, Jan 15 (Reuters) - The euro fell broadly on Friday
as concerns about the struggling Greek economy highlighted
weakness in the euro zone and bolstered expectations
interest rates in the region will stay low for months.
The euro extended losses, hitting the day's low against the
dollar, which briefly rose after JPMorgan reported
higher-than-expected earnings per share in the fourth quarter.
[]
Market confidence in Greece has fallen as its deficit has
ballooned and credit ratings have been cut, weighing on the euro
in the past couple of months. []
Analysts said the market was uncertain about how Greece
would repay its debts, and that speculation remained high it
would probably face difficulties pushing through any recovery
plan.
"Concerns over Greece will weigh on the euro until the
Ecofin's judgement on the government's latest fiscal plan," said
Chris Turner, head of currency strategy at ING. The Ecofin group
of European Union finance ministers will judge the plan next
month at the earliest.
Greece's fiscal problems were highlighted in comments from
European Central Bank President Jean-Claude Trichet, who said on
Friday Europe was facing a "major debt problem". []
Trichet signalled on Thursday that euro zone interest rates
would remain firmly on hold at a record low of 1.0 percent. The
ECB kept them unchanged for the eighth month in a row, in line
with market expectations.
By 1305 GMT, the euro <EUR=> was down 0.8 percent on the day
at $1.4377, near a session low around $1.4367 hit after JPMorgan
Chase announced its earnings.
"Euro/dollar ticked lower on JPMorgan earnings per share
coming in better than expected," said Adam Cole, global head of
currency strategy at RBC in London.
"This seems to be another piece of evidence that the dollar
is trading better on good news rather than better on bad news."
While the dollar initially rose against the euro, market
participants said JPMorgan's revenues were lower than estimates
while consumer lending remained weak, suggesting U.S. banks are
far from recovering from the credit crisis.
Against sterling <EURGBP=D4>, the euro fell to a four-month
low of 88.11 pence.
MERKEL RUMOUR
The single European currency had fallen sharply in Asia, on
rumours, later denied, that German Chancellor Angela Merkel
would resign. These followed the publication of a Time magazine
report about her domestic political problems. []
The euro extended losses in Europe, but its 21-day moving
average around $1.4380 was seen offering some support.
The dollar index <.DXY> rose 0.6 percent higher to 77.165 as
the U.S. currency was boosted despite weak U.S. retail sales and
jobless claims data on Thursday.
Investors awaited U.S. CPI numbers and the New York Fed's
manufacturing survey later on Friday for clues about the pace of
the U.S. economic recovery.
The dollar <JPY=> fell 0.4 percent to 90.61 yen, its lowest
in nearly four weeks, as the yen gained broadly on the back of a
slide in higher-yielding currencies, which suffered from
investors cutting back risky positions.
The Australian the New Zealand dollars each fell around 0.6
percent against their U.S. counterpart while dropping 1.0
percent versus the yen.
The euro <EURJPY=R> also fell 1.2 percent to 130.32 yen, its
weakest in nearly four weeks.
(Additional reporting by Naomi Tajitsu; Editing by Nigel
Stephenson)
