* Euro falls after weak German ZEW, hits 4-mth low vs pound
* Sterling gains on UK inflation data, Kraft/Cadbury deal
* Dollar hits 1-month low vs yen as JAL files for bankruptcy
* Citigroup <C.N> results eyed
(Adds latest on Cadbury; U.S. earnings, updates prices)
By Jessica Mortimer
LONDON, Jan 19 (Reuters) - The euro hit a four-month low
against sterling and a one-month low against the yen on Tuesday
on the back of a weak German sentiment survey and persistent
concerns about Greek public finances.
German analyst and investor sentiment fell more than
expected in January to its lowest level since July, with the ZEW
economic sentiment index dropping to 47.2 in January from 50.4
in December, below forecasts for a fall to 49.5. []
That pushed the single currency to its weakest in more than
a week against the dollar.
The euro's biggest falls, though, were against sterling,
which was boosted by a surge in UK inflation and as U.S.-based
Kraft Foods Inc <KFT.N> agreed a recommended deal to buy Cadbury
<CBRY.L> for around 11.9 billion pounds ($19.6 billion),
creating the world's largest confectioner. []
"The market has reacted to the ZEW data and the euro has
moved lower, but we are still in a very technically driven
market, with price action driven by day-to-day news," said Peter
Wuyts, currency strategist at KBC in Brussels.
Worries about Greece were also "capping the topside" in
euro/dollar, he said, as European Union ministers kept pressure
on Athens to repair its public finances. []
By 1220 GMT, the euro fell 0.6 percent against the dollar to
$1.4290 <EUR=>, having fallen to $1.4282, its lowest since Jan.
8. It also fell against the yen to 129.80 yen <EURJPY=R>.
Against sterling, the single currency <EURGBP=D4> dropped to
87.30 pence, while the pound <GBP=D4> hit a six-week high
against the dollar of $1.6459.
"The story is still one of a soft euro, but sterling is
really taking the limelight at the moment," said Niels
Christensen, FX strategist at Nordea in Copenhagen.
YEN RISES ON JAL, PARES GAINS
The yen gained against the dollar, hitting a 4-week high of
90.32 yen <JPY=>, according to Reuters data, after Japan
Airlines <9205.T> filed for bankruptcy protection as expected,
owing more than $25 billion. []
Traders said the bankruptcy of JAL may lead to yen
repatriation as the company may have to liquidate some of its
dollar-buying derivative contracts or repatriate overseas
assets, helping the currency. []
But the euro's losses against the dollar and a lack of large
follow-through yen buying helped push up the dollar to a session
high of 90.89 yen, traders said.
Traders will look for cues from earnings results of
Citigroup <C.N> and IBM <IBM.N> later on Tuesday. Bank of
America <BAC.N> and Morgan Stanley <MS.N> are due on Wednesday.
The dollar index, a gauge of the greenback's performance
against six major currencies, rose 0.5 percent to 77.505 <.DXY>.
The Australian dollar fell 0.7 percent to $0.9192 <AUD=D4>
as China's central bank stepped up efforts to tighten liquidity
by lifting auction yields on one-year bills for the second week
in a row. [] Any slowdown in Chinese growth is seen
hurting Australian assets.
The Canadian dollar fell 0.3 percent to C$1.0291 <CAD=D4>
ahead of a Bank of Canada rate decision at 1400 GMT, when the
central bank is expected to hold fire. []
Investors will watch for the bank's tone on the
strengthening Canadian dollar. Analysts say the possibility of
central bank rhetoric may make the market wary of pushing the
Canadian currency up significantly.
(Additional reporting by Tamawa Desai; editing by Nigel
Stephenson)
