* Euro trims initial losses vs dollar and edges higher
* Euro pares losses as Chinese shares come off day's lows
* Focus still on euro zone rescue plan
* Support for euro seen near $1.3230
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, Jan 18 (Reuters) - The euro edged higher
against the dollar on Tuesday as the arrest of a slide in
Chinese shares boosted risk appetite, but its gains were limited
by uncertainty over whether officials will agree to beef up a
euro zone safety fund this week.
The euro dipped initially but later pared its losses against
the dollar as Chinese shares showed signs of stabilising
<> after the previous day's 3 percent slide, lending some
support to risky assets.
The euro's rise against the dollar picked up some steam on
stop-loss buying, helping push the single European currency 0.1
percent higher on the day to $1.3305 <EUR=>, up from an intraday
low of $1.3254.
But doubts that euro zone policymakers would reach a quick
decision on whether to enhance a rescue fund aimed at quelling a
sovereign debt crisis, which has forced Greece and Ireland to
take bailouts and put nations such as Portugal and Spain under
heavy pressure, remained the euro's Achilles' heel.
[]
Euro zone finance ministers met on Monday but made no firm
decision about possible additional crisis measures, turning
market attention to the Ecofin meeting of European Union finance
ministers due to be held later on Tuesday.
[]
"What indications we have heard from European
officials over the past several days is that they just don't
feel the same sense of urgency that the market does," said Todd
Elmer, currency strategist with Citi in Singapore.
"I think for the time being that means the euro is likely to
trade lower," Elmer said, adding that the euro could dip back
towards $1.30 in coming weeks.
Europe's safety net fund can borrow on the market with euro
zone government guarantees of up to 440 billion euros, but
analysts say a new package of measures to tackle the crisis is
both essential and urgent.
The euro also edged higher against the Australian dollar
<EURAUD=R> but eased on other crosses, dipping 0.1 percent
against the yen <EURJPY=R> and 0.2 percent against both sterling
<EURGBP=D4> and the Swiss franc <EURCHF=R>.
The euro's recent failure to break above its
mid-December peak of $1.3500 suggests that the single currency
may remain stuck in its range seen over the past month of
$1.3500 to $1.2860.
"Although there have been some wild ups and downs, when you
think about it, the euro has not really been able to break out
of a range roughly between $1.3 to $1.35," said a trader for a
major Japanese bank in Singapore.
"I don't think you can make any definitive assumptions," the
trader said, referring to the euro's near-term direction.
Immediate support is seen in the $1.3230 area, a level
representing the 38.2 percent retracement of last week's 4
percent rally.
European Economic and Monetary Affairs
Commissioner Olli Rehn held out hope for the effective lending
capacity of the European Financial Stability Facility (EFSF)
rescue fund to be expanded, saying he was confident of such an
outcome. []
BNP Paribas analysts said this means dips in euro/dollar
should provide an opportunity to enter a near-term tactical long
position in the $1.3220 area, from where they expect a rebound
through last week's high towards $1.36.
"However, we emphasise that we remain bearish EURUSD over
the medium term and we would look to use rebounds to establish
structural bearish position once it becomes clear that any
changes to the EFSF are falling short of market expectations."
The dollar dipped 0.1 percent against the yen to 82.57 yen
<JPY=>.
(Additional reporting by Hideyuki Sano and Ayai
Tomisawa in Tokyo and Reuters FX analyst Krishna Kumar in
Sydney; Editing by Alex Richardson)
(Reporting by Masayuki
Kitano)((masayuki.kitano@thomsonreuters.com; Reuters Messaging:
masayuki.kitano.thomsonreuters.com@reuters.net;
+65-6417-4682))((If you have a query or comment on this story,
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