* Euro snaps three-day rally vs dollar on euro zone woes
* FX Concept's Taylor sees euro to parity vs dollar
* Peripheral bond yields rise as Eurogorup seen split
(Updates prices, adds quotes, details, changes byline)
By Wanfeng Zhou
NEW YORK, Dec 6 (Reuters) - The euro snapped a three-day
advance versus the dollar on Monday and selling pressure is
likely to continue as doubts grew that European officials
would find a common approach to ease the region's debt
crisis.
The euro had earlier fallen more than 1 percent to around
$1.3250 as traders took profits on its recent gains. The
single currency could head back toward its 2-1/2 month low
around $1.2970 set last week, traders said.
Yields on Italian, Spanish and Greek bonds and the cost of
protecting them against default rose after Germany rejected a
call by the International Monetary Fund to increase the size
of a 750-billion-euro safety net for debt-stricken members.
For details, see []
Last week, Ireland became the second country after Greece
to require an EU/IMF financial rescue and fears are growing
Portugal and Spain will be the next to need assistance. That
pushed the euro down 7 percent versus the dollar last month.
"What Europe has done is not enough. They have to have
eurobonds," John Taylor, chairman and chief investment officer
of FX Concepts, told Reuters 2011 Investment Outlook Summit.
Taylor runs the world's largest currency hedge fund with
assets under management of around $8.5 billion.
"You can't lend money to Ireland or Greece. You're just
piling on more debt to them, and it's getting harder and
harder to repay."
He said Portugal could be the next country to seek a
bailout after Ireland, with Spain after that. This will push
the euro to parity versus the dollar by next year, he said.
<For other news from the Reuters Global Investment Summit,
click http://www.reuters.com/summit/InvestmentOutlookDec10>
The euro <EUR=EBS> was last down 0.7 percent at $1.3317,
coming off a session low of $1.3246 on trading platform EBS.
It also fell 0.8 percent to 109.97 yen <EURJPY=>.
Market talk that fueled the euro's rally late last week
was confirmed on Monday when the ECB said it had bought 1.965
billion euros worth of bonds in the week to Dec. 3 compared
with 1.348 billion the previous week. That was the biggest
weekly total since the end of June and takes the program's
overall tally to 69 billion euros. See []
In the options market, risk reversals showed bearish
sentiment on the euro increased again after falling last week,
suggesting a recovery in the spot euro above $1.34 may have
run its course. The 25-delta 1-month risk reversal
<EUR1MRR=ICAP> rose above 2.0 on Monday after hitting around
1.85 on Friday.
BERNANKE AND QE2
With the euro resuming its decline, the dollar index
<.DXY>, which tracks the greenback versus a basket of six
currencies, was up 0.3 percent at 79.583, close to its 100-day
moving average of 80.04.
Federal Chairman Ben Bernanke said on CBS-TV's "60
minutes" Sunday evening that it is possible U.S. monetary
policy-makers could increase the $600 billion in asset
purchases announced at the last Fed meeting. []
Analysts and traders said Bernanke's comments on QE were
not too bearish, given Friday's sharply below-forecast jobs
growth for November. []
Andrew Wilkinson, senior market analyst at Interactive
Brokers in Greenwich, Connecticut, said Bernanke's comments
assuaged fears over inflation and helped buoy the dollar.
"Bernanke made clear that he has no interest in letting
inflation budge beyond 2 percent and that soothed fears," he
said.
FX Concepts' Taylor said the United States is headed for a
new recession, and that should boost the U.S. dollar while
weighing on commodity prices,
Against the yen, the dollar was flat at 82.58 yen <JPY=>,
climbing off Friday's three-week low of 82.52 yen and keeping
well above the Ichimoku 'cloud' bottom around 81.70 yen.
(Reporting by Wanfeng Zhou; Additional reporting by Gertrude
Chavez-Dreyfuss and Julie Haviv; Editing by Jan Paschal)
