* Equities rebound, but euro sentiment still negative
* Concerns about tight dollar funding weigh
* U.S. durable goods orders, new home sales rise in April
* Geithner calls for action on euro debt crisis
(Updates euro/dollar price to reflect new intraday low, adds
Geithner appeal)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 26 (Reuters) - The euro fell for a third
straight session against the dollar on Wednesday, pressured by
nagging fears about the European debt crisis.
Concerns about tighter dollar funding conditions, with
three-month dollar interbank rates hitting a fresh 10-month
high on Wednesday, and a surprisingly lackluster German debt
auction also weighed on the euro, analysts said. For German
auction see [].
A surge in U.S. durable goods orders and new home sales for
April boosted U.S. stocks and overall risk sentiment, but did
not help the euro. In recent weeks, the euro has become a proxy
for risk appetite, given Europe's debt crisis, rising or
falling in tandem with global stocks.
But that changed on Wednesday and investors dumped euros
even as global stocks rallied.
"We're having a cautious bounce in market sentiment after
upbeat U.S. data, but it's not helping the euro because people
are still concerned about debt problems in the euro zone," said
Vassili Serebriakov, senior currency strategist, at Wells Fargo
in New York.
"Markets are being selective and are instead buying those
with healthier fundamentals such as the Aussie and Canadian
dollar," he said.
The euro's decline this week started with the Spanish
central bank's takeover of a savings bank over the weekend,
which highlighted systemic risks in Spain's banking system.
Earlier in the session, the euro took another dive lower on
speculation that a large Spanish bank has been struggling to
roll over $1 billion in short-term funding in the U.S.
commercial paper market.
In midday New York trading, the euro <EUR=EBS> fell 1.1
percent against the dollar to $1.2225 after hitting session
lows at $1.2191, according to electronic trading platform EBS.
On Tuesday it had hit a low of $1.2177 when investors pulled
back sharply from riskier assets. The euro last week hit its
lowest level since April 2006, falling to $1.2143.
Data showing U.S. durable goods orders surged in April and
new home sales rose to a two-year high last month further
boosted the dollar against the euro. [].
David Resler, chief economist at Nomura Securities
International in New York, noted that the rise in home sales in
April came as the U.S. stock market hit its highest level in a
couple of years.
"It doesn't really tell us much at all except the economy
was clearly gaining some traction when the stock market
stumbled at the beginning of this month," he said.
U.S. Treasury Secretary Timothy Geithner began a two-day,
multi-city European visit on Wednesday to confer with officials
about ways to shore up the world economic recovery. In London
Geithner said Europe has the right ideas to solve its fiscal
crisis but needs to put them into practice to calm markets.
Geithner pressed the case for greater international
cooperation to cope with the crisis spreading through southern
Europe, which is sapping investor confidence. [].
The dollar index, which tracks the performance of the
greenback versus a basket of six other major currencies, was up
0.3 percent at 87.067 <.DXY>.
Against the yen, the euro was down 1.2 percent at 110.36
yen <EURJPY=EBS>, after session lows at 109.88. On Tuesday, it
tumbled to 108.83, its lowest since November 2001.
The dollar was little changed against the yen at
90.26<JPY=>.
(Additional reporting by Rodrigo Campos; Editing by Kenneth
Barry)
