* Greek/German yield spreads widen beyond 500 points
* Greece starts talks with EU and IMF on aid
* Canada dollar at 22-month high vs US dlr on rate outlook
(Updates prices, adds comment, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 21 (Reuters) - The euro slid broadly,
falling for a fifth straight session against the U.S. dollar on
Wednesday, as investors fretted about delays in putting
together a financial aid package for debt-stricken Greece.
The country started talks with European Union and
International Monetary Fund officials on Wednesday on a
potential aid deal that could offer Greece 40 billion to 45
billion euros in loans, but it would take several weeks before
any firm plan could be finalized. For more see
[].
Greek Finance Minister George Papaconstantinou said a joint
text will be agreed by May 15.
"This seems to leave the markets in a state of balance
between fear and optimism without a strong position on either
side," said Dan Cook, senior market analyst at IG Markets in
Chicago. "Sometimes the initial statements leaked (from these
meetings) ... are unconfirmed or denied and market volatility
may pick up."
Bottom line, Cook said, the short-term downtrend that has
been in place since April 14 is still intact but it may be
limited on the downside by the longer-term range.
In early afternoon New York trading, the euro <EUR=>
dropped 0.3 percent to $1.3397, after having fallen as low as
$1.3359, according to Reuters data, its lowest since April 9.
The euro's slide came as the premium investors demand to
buy Greek government bonds rather than euro zone benchmark
Bunds widened beyond 500 basis points, the highest in 12 years,
while the cost of insuring against a Greek default climbed to a
record high. []
Worries about Greece boosted the safe-haven appeal of the
dollar. The ICE Futures U.S. dollar index, which tracks the
value of the greenback against a basket of six currencies
<.DXY>, recovered from the day's low to trade 0.2 percent
higher at 81.213.
Greece is racing to raise 10 billion euros next month, with
markets focusing on an 8.5 billion euro bond that falls due on
May 19. Investors are increasingly convinced Greece will have
to tap the euro zone and IMF package.
"The situation is not getting any better and if anything,
it seems that EU nations are rushing in order to head off a
potential calamity on the 19th," said David Watt, senior
currency strategist at RBC Capital Markets in Toronto.
In other currencies, the Canadian dollar <CAD=D3> rallied
across the board, pushing the U.S. dollar as low as C$0.9931,
its weakest since early June 2008. The greenback was last at
C$0.9990, flat on the day.
The Canadian currency extended its rally from Tuesday after
the Bank of Canada signaled an interest rate rise may come as
early as June. Rising commodity prices also provided a boost.
Against the yen <JPY=>, the dollar was flat at 93.22. The
low-yielding Japanese currency recovered from broad losses as
the Greek debt crisis took center stage. It earlier came under
pressure earlier as strong U.S. earnings lifted risk appetite.
Apple Inc <AAPL.O> posted first quarter earnings on Tuesday
that far exceeded expectations, while Goldman Sachs <GS.N> and
Morgan Stanley <MS.N> also announced strong results.
The Swedish crown <EURSEK=D4> hit a 19-month high at 9.5850
per euro, extending its rally after Sweden's central bank on
Tuesday cemented market expectations for a rise in interest
rates in July or September.
(Additional reporting by Wanfeng Zhou; Editing by James
Dalgleish)
