Euro stuck at 4-month low vs dollar

2011-01-10 09:42

Hong Kong - Mounting fears over sovereign debt in the eurozone kept the euro tethered to four-month lows against the dollar on Monday, with investors nervous ahead of a flurry of bond sales from the region's weaker states.

Portugal, Spain and Italy were expected to pay a high price to tap capital markets in what is seen as the year's first major test of whether the countries on the eurozone's periphery can fund their huge debt piles at sustainable cost.

"Clearly the sovereign debt issue is still there and the market is quite happy to just sell euros," a trader at a US investment bank said.

The euro also slid to near 1.2450 Swiss francs and ¥107.00 . The single currency last stood at 1.2470 francs and ¥107.17.

The dollar index , which tracks the greenback's performance against a basket of major currencies, rose to a five-week high, recovering from a brief dip following weaker US non-farm payrolls data on Friday.

The index last traded 81.01 after hitting a high of 81.2 earlier in the day.

Asian stocks were little changed on Friday with trading volumes light as Japanese markets remained closed for a public holiday. The MSCI Asia ex-Japan index was up 0.1% with energy stocks outperforming on oil's rebound.

Crude oil surged towards $90 a barrel, bouncing back from last week's 3.2% dip, after a leak shut an Alaskan pipeline that carries 12% of US crude output.

The Trans Alaska Pipeline was shut down on Saturday with no indication of when it would reopen after a leak discovered at Prudhoe Bay, forcing oil companies to cut output to 5% of their daily average of 630 000 barrels.

Earnings season for major US corporations kicks off later on Monday with major industrials, big oil, banks and chipmakers scheduled to report quarterly numbers.

Aluminum producer Alcoa , scheduled to report later on Monday, was expected to post a strong fourth-quarter profit amid signs that a growing global economy is pushing up demand for aluminum and driving up the metal's price.