* Euro slides on Steinbrueck's EU fiscal stability remarks
* Dollar rallies broadly on Japan, Russia G20 view
* Euro falls 2 cents intraday to below $1.34 <EUR=>
(Adds quote, updates prices)
By Tamawa Desai
LONDON, March 27 (Reuters) - The euro slid sharply on Friday
after Germany's finance minister said fiscal irresponsibility in
Europe could put the currency at risk, and the dollar drew extra
support ahead of next week's Group of 20 leaders' meeting.
The yen rallied broadly on flows related to last-minute fund
repatriation by Japanese investors ahead of the annual
book-closing on March 31, and expectations for further flows
into Japan due to a change in tax regulation.
Senior Japanese and Russian officials said the dollar's
status as global reserve currency was unlikely to be discussed
at next week's G20 summit in London, cooling some speculation
that it would be an issue at the meeting.
That gave the dollar broad support, while German finance
minister Peer Steinbrueck's comments, weaker-than-forecast euro
zone industrial orders and German state inflation data triggered
a huge batch of pre-placed euro sell orders, traders said.
The euro lost more than two full cents on the day to hit a
week-low of $1.3296, as selling was exacerbated after falling
through technical support at the 200-week moving average of
$1.3380.
"The move in the euro is all about the Steinbrueck
comments," said Chris Turner, head of FX strategy at ING.
Steinbrueck told the German parliament: "Germany, as a
member of the EU, has a massive interest in the credibility of
the Stability and Growth Pact, which as you know is not taken so
seriously by some."
"If it is not taken seriously, I am telling you, the euro
will have trouble one day in terms of its own credibility and
stability."[]
By 1159 GMT, the euro was down 1.5 percent on the day at
$1.3320 <EUR=> from an intraday high of $1.3591.
"Moving one and a half big figures (cents) on comments like
that earlier from Steinbrueck just goes to show how nervous and
irrational the market is right now," said a trader in London.
The euro was down 2.8 percent against the yen at 129.87 yen
<EURJPY=>, while the dollar was down 1.3 percent at 97.46 yen
<JPY=>.
The dollar index, a measure of the dollar's value against
six major currencies, was up 1.0 percent on the day at 84.970
<.DXY>, having earlier traded down on the day.
EYES ON G20, DOLLAR
Data on Friday showed that euro zone new industrial orders
slumped 34 percent year-on-year in January, while German state
inflation data ahead of the national figure showed consumer
prices falling in March. <ECON>
The European Central Bank is widely expected to cut interest
rates by 50 basis points to 1 percent next Thursday but may also
announce further liquidity-boosting measures. []
"The spectre of deflation within the euro zone would open
the door for the ECB to be more forthright on unconventional
policy measures," said analysts at Calyon in a note.
ECB Vice-President Lucas Papademos said on Thursday the ECB
could buy private sector bonds in a bid to boost liquidity in
the face of a feared "vicious circle" of negative effects.
Meanwhile, the dollar's broad gains were in part fuelled by
comments from a senior official at Japan's Ministry of Finance
and a senior Russian central bank official that the dollar will
remain the world's reserve currency for some time.
The yen was also supported on talk about tax-related bills,
expected to be included in a state budget passed on Friday, on a
Japanese version of the U.S. Homeland Investment Act, which
would allow corporations to repatriate funds held at overseas
affiliates free of tax.
