Euro weakens against yen as EU ministers debate aid for Greece

The euro fell for the first time in six days against the yen as European Union finance ministers gathered for a third meeting this month to try to reach agreement on aid for Greece.

The 17-nation currency dropped from a three-week high versus the dollar after pro-independence parties in Spain’s Catalonia won a majority in a regional election, underpinning a drive for a referendum on secession. The yen rose against all of its 16 major counterparts as a decline in global stocks boosted demand for safer assets and after a technical indicator signaled its recent slide was excessive.

“Today is critical in terms of reaching the agreement, which is not very much expected,” said Vassili Serebriakov, a currency strategist at BNP Paribas SA in New York. “What’s interesting with the euro is how it’s shown resilience to bad news.”

The euro declined 0.5 percent to 106.44 yen at 9:34 a.m. in New York after rising to 107.14 yen, the highest level since April 27. The single currency fell 0.1 percent to $1.2962 after climbing to $1.2991 on Nov. 23, the strongest since Oct. 31. The yen gained 0.3 percent to 82.11 per dollar.

Canada’s dollar fell against all its major counterparts, declining from almost a two-week high versus its U.S. peer as risk appetite waned. The Canadian currency, known as the loonie, weakened 0.2 percent to 99.46 cents per U.S. dollar.

Reserve Currency

The currency got a boost last week after the International Monetary Fund’s move to deem the Australian and Canadian dollars reserve assets, bolstering demand even as the commodity boom that drove the currencies to the strongest since at least 2007 loses steam. The loonie added 0.8 percent last week, the most since the five days ended Aug. 10.

Finance chiefs from the single-currency bloc started their meeting at 12:30 p.m. in Brussels, less than a week after an all-night gathering failed to yield agreement and days after a European Union summit broke up without a proposed seven-year budget. At stake is the continuation of a three-year mission to return Greece to financial health.

“It would be irresponsible not to reach an accord given all the efforts that have been made,” French Finance Minister Pierre Moscovici said yesterday on BFM television.

A solution is hung up on politics in Germany, the dominant country in Europe’s crisis management, where Chancellor Angela Merkel is campaigning for a third term next year on the pledge that Greece won’t cost taxpayers an additional cent.

“It seems a final agreement for Greece is very close although this is another measure which kicks the can down the road,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.

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