Euro rangebound ahead of debt summit

TOKYO (AFP) - The euro resisted further falls against other major currencies in Asia on Wednesday but investors braced for possible disappointment over a crunch summit on the eurozone crisis later in the day. The euro bought $1.3917 and 105.84 yen in Tokyo morning trade, marginally up from $1.3904 and 105.78 yen late Tuesday in New York where the common European currency fell amid worries over the sovereign debt crisis. The dollar was at 76.08 yen after falling to a new post-World War II low of 75.73 yen briefly in New York on Tuesday, prompting further efforts by officials in Tokyo to talk the Japanese unit lower with intervention threats. European leaders are scheduled to sign off in Brussels on Wednesday a plan to boost confidence in the eurozone after months of indecision and uncertainty that have sparked sharp criticism from other global powers. Officials are hoping to reach a final agreement on giving the eurozone's bailout fund more power to assist indebted nations, while striking a deal with Greek bondholders to lower the amount of bail-out aid needed for Athens. A source close to the negotiations told AFP that the EU has asked banks to agree a 60 percent write-down on their Greek debt holdings. But the canceling of a EU finance ministers' meeting scheduled before the summit Wednesday concerned those expecting a resolution to the sovereign debt crisis at Wednesday's summit, National Australia Bank said. "There was always a risk of disappointment, and there may be a last minute 'rabbit out of the hat' moment, but this is increasingly unlikely," it said in a note. Markets are reflecting this, as equities are lower, bond yields are broadly lower and gold is higher, it said. However, Credit Agricole said in a research note that with the emergency meeting of the EU and eurozone leaders still going ahead, the cancellation "could hint" at a positive outcome, but added "no official declaration was made to support this view." It added that any official concrete announcements on enhancing Europe's bailout fund, the European Financial Stability Facility, were "unlikely to be provided as soon as at today's meetings." The yen has risen due to its status as a safe-haven currency, attracting investors fleeing European sovereign debt problems and a slowdown in the US economy. Japan's Finance Minister Jun Azumi on Wednesday warned that Tokyo will consider "every possible measure" in dealing with speculative buying of the yen, making market players brace for possible yen-selling intervention. A senior dealer at a major Japanese bank said the focus was on whether Japan would soon intervene. "We cannot support the dollar against the yen any more only with verbal intervention and expectations for BoJ (Bank of Japan) monetary easing," the dealer told Dow Jones Newswires. The Bank of Japan will discuss additional monetary easing measures to help blunt the impact of a strong yen on the economy when its policy board convenes for a meeting Thursday, The Nikkei daily reported early Wednesday. The BoJ may consider expanding its 50 trillion yen asset-buying programme by around 5 trillion, it said.

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