* Buying by Asian accounts limits euro losses
* Euro recovers, up 0.2 pct at $1.3957 <EUR=>
* Market still wary about euro zone peripheral debt
* Dollar back below 81.00 yen <JPY=>
(Adds quote, updates prices)
By Tamawa Desai
LONDON, Nov 9 (Reuters) - The euro erased early losses
against the dollar on Tuesday as Asian accounts bought on dips
and caught speculative players by surprise, but the shared
currency was weighed by peripheral euro zone debt concerns.
The euro initially fell to its lowest in more than a week
against the dollar, to $1.3823 on trading platform EBS.
But buying by Asian sovereign accounts, particularly from
the Middle East, stemmed losses and sent short-term traders
scurrying to cover positions, sending the euro back around a
full cent from lows.
Stop-loss orders around $1.3950/60 also helped push it up
further to the day's high of $1.3973, up around 0.3 percent on
the day <EUR=>. More stop-loss orders were seen above $1.40,
traders said.
Traders also mentioned buying interest around $1.3850 to
protect option barriers at $1.3800, and talk of a double
no-touch option at $1.38/$1.48.
"We saw a sharp turnaround in the market, wrongfooting some
players, but the fundamental view regarding the euro and
sovereign risks hasn't changed," one London-based trader said.
Analysts said there was still potential for a slide to more
important support at its Oct. 20 low of $1.3697, having fallen
below support at $1.3835, the 76.4 percent retracement of its
move up from the Oct. 20 low to $1.4283 on Nov. 4.
"We are bearish on the euro with spreads widening and
peripheral euro zone debt once again under pressure," said
Hans-Guenter Redeker, chief fx strategist at BNP Paribas.
The cost of protecting government debt against default in
Ireland, Portugal and Spain has risen substantially in the past
week, although credit default swap prices eased a bit on Tuesday
ahead of a Portuguese bond auction the following day.
[]
For a column on widening bid/offer spreads on euro zone
sovereign debt please click on [].
Greece successfully sold 390 million euros of six-month debt
on Tuesday but had to pay 28 basis points more in yield compared
with an October sale. []
HEDGE FUNDS BOOK CLOSURE AND G20
The euro also shed losses against the yen, but was still
down 0.4 percent at 112.50 yen <EURJPY=R> after falling to a
one-week low of 111.74 yen
Traders said some macro players and Commodity Trading
Advisers, who are short-term players, were closing their long
euro and short dollar forward and futures positions ahead of
their book closing at the end of this month or next.
However, the dollar fell 0.7 percent to 80.59 yen <JPY=>
after earlier holding steady above 81.00, above its 1995 record
low of 79.75 yen and capped at 82 yen, where offers from
Japanese corporates were seen.
A pullback in risk-taking sentiment after China said it
would strictly manage company short-term foreign debt quotas
[] prompted yen gains, traders said.
The market was also watching this week's meeting of Group of
20 leaders in South Korea, as they attempted to agree on ways to
reduce imbalances to bolster a fragile global economic recovery.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Greek, Irish bond yield spread http://r.reuters.com/tuk54q
G20 battle lines: http://r.reuters.com/jux34q
Basel III; rule reshaping: http://r.reuters.com/zys68p
Gold price performance: http://link.reuters.com/juz44q
Trade, currency tensions simmer pre-G20 []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The New Zealand dollar <NZD=D4> was pressured on reports the
United States had stopped importing kiwi-fruit vine on worries
that an orchard could be infected with a virus.
(Additional reporting by Anirban Nag; Graphics by Scott Barber;
Editing by Catherine Evans/Ruth Pitchford)
