* Euro edges up, holding Tuesday gains as EU summit awaited
* Uncertainty abounds on fiscal assistance plan for Greece
* Greek plan may boost euro, but risk aversion remains
(Adds comment, details)
By Naomi Tajitsu and Neal Armstrong
LONDON, Feb 10 (Reuters) - The euro edged higher on
Wednesday, holding gains made the previous day as the market
braced for a European Union summit while traders sought clarity
on whether Greece may get help in tackling its fiscal problems.
The euro jumped after traders cited a media report that
Germany was said to be considering aid for Greece beyond loan
guarantees, but trimmed gains on comments from France that there
was no euro zone agreement on an aid package at the moment.
[]
German government coalition sources subsequently said
bilateral financial aid could be provided for Greece, pushing
the single European currency to the day's high versus the U.S.
dollar.
Ultimately, the euro made limited headway amid uncertainty
regarding the outcome of Thursday's meeting. Concerns about the
fiscal positions of several euro zone countries were also making
investors wary of taking big positions.
"The big focus is on what comes out of Thursday's meeting and
whether there will be any agreement is still up for debate. The
euro has seen relatively little movement on this morning's news
and I still think the topside will take some cracking", said
RBS' Paul Robson.
By 1210 GMT, the euro <EUR=> was steady on the day at
$1.3780, having hit a session high of $1.3815, according to
Reuters data.
It had climbed a full percent on Tuesday and pulled further
away from an 8 1/2-month trough around $1.3580 hit last week.
Speculation about possible assistance swirled, with France's
Le Monde newspaper saying that a German-led plan for Greece
should be finalised on Wednesday after talks with the European
Central Bank. []
"The market is to-ing and fro-ing on the prospect of any
sort of package to help Greece," said Adam Cole, global head of
currency strategy at RBC in London.
"This is an unprecedented situation and there are several
conceivable resolutions, and a strong case can be made for any
of them, and that is weighing on the euro."
Pressure on the euro has eased slightly this week after it
took a pounding as gaping deficits not only in Greece but in
Portugal and Spain highlighted the dismal financial positions of
some euro zone members, undermining stability in the 16-country
bloc.
The euro <EURJPY=R> was down slightly at 123.60 yen as
traders took a breather after pushing the single currency up
roughly 1.5 percent on Tuesday, its biggest one-day gain since
October 2009.
SPREADS NARROW
Anticipation of a rescue for Greece has helped to stabilise
markets and pull the euro back from the 8 1/2-month low versus
the dollar and a near 12-month trough against the yen, but some
analysts said any proposed plan would hardly spell the end of
the euro's downtrend.
"Any package from EU countries will raise the usual concerns
about moral hazard and, perhaps more pertinent in the short
term, whether the internal adjustment conditions will be
successfully enforced," analysts at Barclays said in a note.
They added that weakness in the euro area economy would keep
the currency under selling pressure.
The euro was underpinned on Wednesday as the government bond
yield spreads between Greece and Germany -- considered by far
the safest of euro zone debt -- continued to narrow, suggesting
that jitters about Greece may be fading slightly.
Analysts said the currency market wanted to see whether a
concrete plan for Greece would materialise at the summit, and
that the euro may benefit if peripheral spreads contract more.
The market also awaited comments by Federal Reserve Chairman
Ben Bernanke who is expected on Wednesday to outline the Fed's
strategy for tightening. The prepared testimony will be released
at 1500 GMT, even though the congressional hearing has been
postponed.
(Editing by Nigel Stephenson)
(Additional reporting by Naomi Tajitsu; Editing by Ron Askew)
