* Euro falls vs dollar as EU wrangling over Greece continues
* Merkel says no need to discuss Greece at EU summit
* Greece worries, risk aversion support dollar
(Updates prices; changes byline, dateline; previous TOKYO)
By Jessica Mortimer
LONDON, March 23 (Reuters) - The euro fell against the
dollar on Tuesday as wrangling among European Union leaders over
possible support for Greece continued in the run-up to a summit
later this week.
Growing concerns that EU leaders may not reach a decision
this week kept the euro close to a three-week low hit on Monday
and fanned risk aversion, supporting safe-haven flows into the
U.S. dollar.
German Chancellor Angela Merkel, facing fierce opposition in
Germany to any bailout of the highly indebted country, said
there was no need to discuss an aid mechanism at an EU summit
starting on Thursday.
This prompted European Commission President Jose Manuel
Barroso to call on Merkel to rise above domestic politics and
agree on a financial safety net for Athens or risk harm to the
common currency. []
"We've got a game of to-ing and fro-ing and people just want
to stay away from the euro at the moment," said Geoffrey Yu,
currency strategist at UBS in London.
At 0850 GMT, the euro fell 0.3 percent against the dollar
<EUR=> to $1.3514, not far from Monday's three-week low around
$1.3461, though it held above the $1.35 mark. The euro also lost
0.1 percent versus the Japanese yen <EURJPY=R> to 121.99 yen.
The dollar index <.DXY>, a measure of its performance
against six other currencies, rose 0.2 percent to 80.820, edging
closer towards an eight-month high of 81.342 set in February.
NO RESPITE FOR EURO
European Central Bank President Jean-Claude Trichet also
took a tough line on Greece, saying aid could only take the form
of a loan with strict conditions, not a subsidy. []
"This lack of action on Europe's part could well force
Greece to carry out their threat to go to the IMF ... and so the
internal wrangling goes on and in the meantime the euro will
continue to remain under pressure," CMC Markets analyst Michael
Hewson said in a note.
Against the Swiss franc, the euro was steady <EURCHF=> at
1.4342 francs, having earlier spiked briefly to a session high
of 1.4371 after Swiss National Bank Chairman Philipp Hildebrand
pledged again to counter any excessive Swiss franc rise.
[]
"If you look at the evolution of the SNB's language it
suggests they're not so worried about it (Swiss franc
appreciation) any more," UBS' Yu said.
Sterling underperformed ahead of UK inflation data at 0930
GMT, falling 0.5 percent against the dollar <GBP=D4> to $1.5024.
The dollar edged up 0.2 percent to 90.27 yen <JPY=> after
dipping as far as 89.83 yen on Monday when Tokyo was shut.
However, it is roughly in the middle of an 88-92 yen trading
range seen since mid-January, with prospects for U.S. rate hikes
still distant after the Federal Reserve reiterated a pledge to
keep rates low for an extended period, a stance reinforced by a
non-voting Fed official on Tuesday. []
Andrew Robinson, FX market analyst at Saxo Bank in Singapore
said the dollar could be building a base at about 89.70/80 yen
although it faced resistance from a down trend line and its
200-day moving average above 91.00.
(Additional reporting by Charlotte Cooper in Tokyo, editing by
Mike Peacock)
