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Doubts over Greece weigh on euro
European single currency hits near two-year lows as EU summit fails to allay investor fears over Greek economy.
Last Modified: 25 May 2012 05:02

The euro has hit near two-year lows, with analysts saying it may fall even further.

In mid-afternoon trade on Thursday, the European single currency was at $1.2577, coming off an early low of $1.2516, levels seen in July 2010 and down from $1.2582 in New York late on Wednesday.

The news came as US employment data offered little light in the gloom while an EU summit failed to come up with any new remedy to reassure investors over Greece's future.

In London, the benchmark FTSE 100 index of top companies was up 1.19 per cent at around 1400 GMT, despite news of a worse-than-expected contraction in British economic growth in the first quarter.

Elsewhere, Frankfurt's DAX 30 edged up 0.30 per cent as investors shrugged off news that  business confidence in Germany dropped to a six-month low in May.

The Paris CAC 40 rose 0.87 per cent.

Other European markets posted similar gains.

In New York, the blue-chip Dow Jones Industrial Average gave up early gains to slip 0.15 per cent while the tech-rich Nasdaq was down 0.27 per cent.

Surveys indicated the European economy slowing sharply across the board while the latest US jobs numbers showed no marked improvement in hiring, the key development needed to increase demand and get the economy moving again.

EU leaders pledged support for Greece at an informal Brussels summit on Wednesday, but analysts said the meeting highlighted divisions between France and Germany on dealing with the region's ongoing sovereign debt crisis.

Fears remain that the crisis, which has already resulted in bailouts for Ireland, Greece and Portugal, could now potentially spread to Spain and Italy.

Source:
Agencies
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