Euro sinks on report about China's holdings

11:01, May 27, 2010      

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The euro fell against major currencies on Wednesday on a report that China was reviewing its euro holdings.

The Financial Times, without citing sources, said China was reviewing its holdings of eurozone debt in the wake of the crisis that has swept through the region's bond markets.

A couple of encouraging U.S. economic report drove stocks higher but failed to lift the euro. Worries persist about the debt crisis and weak growth outlook in the eurozone, analysts said.

The 16-nation single currency was also hurt by rising interbank rates and weak demand for German bonds. The three-month U.S. dollar London interbank offered rate, or Libor, which hit another 10-month high on Wednesday. An auction of 7 billion euros of five-year German government bonds drew the lowest demand since March 2008.

The euro bought 1.2192 dollars in late New York trading compared with 1.2332 dollars it bought late Tuesday. The pound fell to 1.4383 dollars from 1.4397 dollars.

The dollar fell to 1.0682 Canadian dollars from 1.0694 Canadian dollars, and rose to 1.1593 Swiss francs from 1.1570 Swiss francs. It fell to 89.94 Japanese yen from 90.11 Japanese yen.



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