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EU worries keep euro near 2-year low

May 25 2012 11:23 Reuters

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London - The euro wallowed near two-year lows early on Friday while European shares edged up, as uncertainty over the fate of Greece coupled with this week's disappointing eurozone and Chinese economic data curbed any appetite for riskier assets.

The euro was down 0.1% at $$1.2540, but has lost 1.78% this week after on Thursday touching its lowest level since July 2010, at $1.2515. The US dollar index measured against key currencies benefited from safe-haven demand to touch a fresh 20-month peak of 82.411.

"Markets have priced in a very negative scenario for Greece as well as deteriorating growth prospects in the eurozone, but with them very much focused on the tail risk of Greece leaving the euro bloc, the euro remains highly vulnerable," said Masafumi Yamamoto, chief FX strategist at Barclays.

Fresh concerns about the fate of Greece's euro membership were rekindled after an opinion poll found the anti-bailout leftist party SYRIZA maintaining its lead ahead of the June 17 election.

The risk-off mood across the markets saw Asian shares outside Japan post a third consecutive week of losses to hit their lowest levels of the year. MSCI's broader world equity index dipped 0.2% to 300.46, close to where it started 2012.

The eurozone's blue-chip Euro STOXX 50 index, which has plummeted 17% since mid-March, opened little changed at 2,157.26.

German Bund futures were 5 ticks higher at 144.02, with 10-year bonds in the cash market yielding 1.39%.

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