* Euro gains broadly, recovers from 10-month low
* Euro zone leaders agree Greece safety net, includes IMF
* Uncertainties remain; euro down 6.6 pct vs dlr in 2010
(Recasts, adds comments; changes dateline, previous LONDON
and byline)
By Vivianne Rodrigues
NEW YORK, March 26 (Reuters) - The euro rose broadly on
Friday after euro zone leaders agreed on a safety net for
Greece, though uncertainties remained over the country's debt
sustainability.
Euro zone leaders agreed on an aid package under which
Greece would receive both bilateral loans from euro zone
partners and funding from the International Monetary Fund if it
faced severe difficulties. []
But the plan did not alleviate longer-term worries about
Greece and other fiscally vulnerable economies in the region,
such as Portugal and Spain, limiting euro gains.
Analysts said the package is limited because it only offers
funding as a last resort and only with unanimous euro zone
approval.
The package "reduces some of the biggest risks on Greece
and we are obviously seeing the euro respond to that," said
Daniel, Katzive, a director for global foreign exchange at
Credit Suisse, in New York.
"But ultimately, the markets remain apprehensive over their
fiscal situation and it will be hard for the euro to gain real
traction against the dollar in the short term," he said.
Greece is saddled with borrowing costs more than double
those of Germany and must borrow some 16 billion euros ($21.3
billion) between April 20 and May 23 to refinance maturing
debt.
In morning trading in New York, the euro <EUR=> was up 0.6
percent against the dollar at $1.3352, recovering after hitting
its weakest level since early May at $1.3268, according to
Reuters data.
In the United States, the dollar had a limited reaction to
a government report showing the country's economy grew at a
slightly less brisk pace than previously estimated in the
fourth quarter. []
The dollar index <.DXY>, a measure of its performance
against six other major currencies, fell 0.2 percent to
81.932.
The greenback struck its highest level since early January
against the yen on Thursday at 92.96 yen <JPY=>, boosted by a
rising differential between U.S. and Japanese yields, but
trickled back on Friday to trade at 92.82 yen, up 0.1 percent
on the day.
Meanwhile, the euro advanced 0.8 percent to 124.03 yen
<EURJPY=>.
LINGERING DOUBTS
Concerns about Greece's fiscal health have caused the euro
to lose more than 6 percent versus the dollar this year and
despite the potential aid, the currency is likely to resume
declines.
"This buys the euro a bit of time, but nothing fundamental
has changed and Greece still has to roll over its debt," said
Michael Hewson, an analyst at CMC Markets, in London.
Hewson said the previous support around $1.3480 had become
a significant resistance level. A weekly close below here
would "reinforce a downside trend in euro/dollar, potentially
taking it down toward $1.3000," he said.
European Central Bank President Jean-Claude Trichet on
Thursday said the aid mechanism was "workable" although it was
unlikely ever to be activated. []
Some analysts said the IMF's involvement could speed up
Greece's fiscal reconstruction, although others said the deal's
extremely strict conditions could harm the Greek economy.
"Going forward the market will be focusing more on whether
Greece will be able to deliver the austerity measures it has
promised," said Johan Javeus, currency strategist at SEB in
Stockholm.
The euro gained 0.5 percent against sterling <EURGBP=D4> to
90.02 pence.
(Additional reporting by Jessica Mortimer in London)
(Editing by Theodore d'Afflisio)
