* Euro falls as sterling tumbles, Greece worry weighs
* Pound falls most versus dollar since October 2009
* Canadian dollar outperforms on stronger growth data
(Updates prices, adds comment, details)
By Wanfeng Zhou
NEW YORK, March 1 (Reuters) - The euro fell against the
U.S. dollar on Monday, led by a sharp sell-off in sterling and
lingering uncertainty over a bailout for debt-strapped Greece.
The pound hit a 10-month low versus the dollar and was on
track for its biggest one-day drop since October after a poll
showed increased risk that no party will win a majority in this
year's general election, making it difficult to take tough
action to reduce Britain's debt. For more see [].
Having broken through the key $1.50 level, the pound
dropped roughly 3 percent at one point, with traders citing
selling by a UK bank after UK insurer Prudential Plc <PRU.L>
said it would buy American International Group Inc's <AIG.N>
Asian life insurance business.
The euro had steadied earlier in the global session on
hopes Greece may be nearing a deal with EU governments to get
some form of emergency aid, although analysts said the lack of
concrete developments suggests the currency remains fragile.
"It's continued concern about sovereign risk both for the
euro and the pound," said Sophia Drossos, co-head of global
currency strategy at Morgan Stanley in New York. "These
sovereign risk issues are not going to go away very quickly."
In midday trading, the euro <EUR=> fell 0.8 percent to
$1.3523 after hitting a session low of $1.3461, according to
Reuters data, not far from a nine-month low of $1.3442 last
month.
The pound <GBP=D4> traded 1.7 percent lower at $1.4993. At
current prices, it's on track for its biggest one-day decline
since late October 2009. It had tumbled as low as $1.4781.
"Political uncertainty now is adding to an already clouded
outlook for the pound," said Omer Esiner, senior market analyst
for Travelex Global Business Payments in Washington. "The pound
has been significantly undermined by UK's lackluster economic
recovery as well as the possibility of additional credit easing
from the Bank of England."
Market participants also used weaker-than-expected data on
UK mortgage approvals as another reason to knock the pound to a
three-month low against the euro <EURGBP=D4>.
EURO SHORT POSITIONS
The euro had been helped by speculation that a visit by EU
Economic Affairs Commissioner Olli Rehn and European Central
Bank Executive Board member Juergen Stark to Athens could move
EU governments closer to a deal. []
But uncertainty remained over whether the other governments
will agree on support as German Chancellor Angela Merkel
stressed that no decision had been taken. []
Traders said sentiment on the euro remained negative. Data
from the Commodity Futures Trading Commission showed net short
euro positions rose to a record in the week to Feb. 23.
[]
Sharp losses in the euro and sterling helped lift the ICE
Futures U.S. dollar index <.DXY>, which tracks the greenback
versus a basket of six other major currencies. The index was up
0.7 percent at 80.890.
Against the yen, the dollar rose 0.5 percent to 89.27 yen
<JPY=>.
The Canadian dollar rose, with the greenback falling 1
percent to C$1.0419 after data showed Canada's quarterly
economic growth beat estimates. []
"We had very strong growth data for (the fourth quarter)
from Canada today, making it clear that growth continues to
recover and suggesting that the Bank of Canada might have to
exit its policy accommodation sooner rather than later," Morgan
Stanley's Drossos said.
Central banks in the euro zone as well as Britain, Canada
and Australia all have monetary policy meetings this week.
(Editing by James Dalgleish)
