* Euro rises to highest level vs dollar in nearly a month
* Greek package, while good news, still needs clarity
* Short-term unwinding of euro shorts likely
*
(Updates prices, adds comments, byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 12 (Reuters) - The euro climbed to its
highest level against the U.S. dollar in nearly a month on
Monday after euro zone finance ministers agreed on a financial
aid package for Greece, but the currency pared gains as
investors sought details about the plan.
The finance ministers approved a 30 billion euro ($40.5
billion) rescue package of loans, which Greece could tap if
needed. At least 10 billion euros are also expected from the
International Monetary Fund. For more, see []
"The package has the size and terms the market wanted to
see and it came quicker than expected," said Jens Nordvig,
senior currency strategist at Nomura Securities in New York.
"There is still procedural uncertainty about activation and
disbursement, but the bottom line is that we now have something
concrete for the first time in this saga, and that should be
important for markets."
The massive financial safety net boosted investor appetite
for riskier assets, lifting U.S. stocks and briefly helping
drive the Australian dollar to its highest in five months,
before it fell later in the session.
Investors, however, were still cautious, prompted in part
by the need for clarification of details on how the aid
mechanism could be activated.
Christoph Steegmans, a German government spokesman, said on
Monday that euro zone leaders, not those of the full European
Union, would need to meet to activate the aid package for
debt-ridden Greece. []. Earlier, Steegmans had
said such a decision would require a full meeting of EU
leaders.
When asked by Reuters to clarify the point, he said a
meeting "of government leaders from euro zone countries" would
be needed.
Early headlines said the German Bundestag would also need
to be consulted. []
EURO RALLY NOT "EARTH-SHATTERING"
The euro rose to $1.3691 <EUR=>, its highest since
mid-March, according to Reuters data, before trimming gains to
$1.3579 in early afternoon, up 0.6 percent on the day. From
trough to peak, the euro has climbed about 4 cents since last
Thursday.
"That said, the euro/dollar rally has not been
earth-shattering and that fits with the notion that there are
medium-term asset allocation shifts at play, a negative for the
euro," said Nordvig, of Nomura Securities.
"I am pretty comfortable with (Nomura's) existing path for
euro/dollar, which sees a moderate move lower in Q2 to $1.32,
followed by a further slight decline in Q3 to $1.30."
Analysts expect short-term unwinding of net euro short
positions, which were reduced slightly after hitting record
highs a few weeks ago. That could probably take the euro to
$1.38-$1.40 on a short-term basis.
Against the yen, the single currency rose more than 1
percent to 127.45 yen <EURJPY=> before surrendering some of
those gains. It last traded at 126.62 yen, up 0.7 percent on
the day.
Greek borrowing costs eased to 353 basis points from 409
basis points on Friday, driving premium investors to hold
10-year benchmark Greek debt rather than German paper. Greece
will test market appetite for its debt further with an auction
of 1.2 billion euros of Treasury bills on Tuesday
[].
The single currency is still down more than 5 percent
against the dollar and 4.6 against the yen in 2010 to date,
making it an underperformer among major currencies.
The high-yielding Australian dollar briefly rose as high as
US$0.9382 <AUD=> on improved risk appetite in Asia before
retreating to US$0.9285, down 0.5 percent.
The dollar rose 0.1 percent against the yen to 93.25 yen
<JPY=>, with a possible revaluation in China's yuan currency in
focus. Chinese President Hu Jintao visits Washington this week
for a nuclear security summit and is expected to hold a
one-on-one meeting with U.S. President Barack Obama on Monday.
(Additional reporting by Nick Olivari; Editing by Leslie
Adler)
