FOREX-Euro falls on ECB Greek woes; dollar up broadly

Thu Mar 4, 2010 2:48pm EST Related News Euro in reverse, dollar supported ahead of payrollsThu, Mar 4 2010U.S. shares rise on data; euro falls on ECB outlookThu, Mar 4 2010FOREX-Euro slips, ECB to unwind some liquidity measuresThu, Mar 4 2010MONEY MARKETS-Euro implied rates up after Greece measuresWed, Mar 3 2010MONEY MARKETS-Euribor futures ease as Greek deal hopes riseMon, Mar 1 2010

* Euro slips despite strong Greek bond sale

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* ECB keeps rates steady, to unwind some liquidity measures

* Trichet still sees uneven euro zone recovery

* Dollar higher vs yen after mixed U.S. data

(Updates prices, adds comment, detail; changes byline)

By Steven C. Johnson

NEW YORK, March 4 (Reuters) - The dollar rose broadly onThursday and the euro fell after Europe"s central bank chiefsaid recovery would be uneven, reducing the chances of anear-term rise in record low euro zone interest rates.

Analysts said worries about Greece and other heavilyindebted euro zone countries also weighed on the euro even as aa sale of fresh Greek 10-year debt drew solid demand.[ID:nLDE6230XS]

Greece announced plans on Wednesday for a further $6.5billion in pay cuts and tax hikes to cut its budget deficit,though it was unclear if that will generate additional helpfrom larger euro zone countries such as Germany and France.

While the ECB took a small step toward unwinding someextraordinary support for the economy, it extended untilOctober a program that provides unlimited funds to banks atflat rates, longer than most analysts had expected.

ECB President Jean-Claude Trichet said that was "exactlyappropriate taking into account the present situation."[ID:nLDE6232FX] and [ID:nLDE62307B].

"There"s still a lot of concern about Greece and deficits,and that"s a burden when it comes to tighter monetary policy.So that helped trigger a sell-off in the euro," said KathyLien, director of research at GFT Forex in New York.

The euro was last down 1 percent to $1.3562 EUR=.Earlier, it rose above $1.37 following the Greek debt auction.

As expected, the ECB on Thursday kept benchmark interestrates at 1 percent for the tenth month running. Sterling fell0.5 percent to $1.5022 GBP= after The Bank of England leftrates unchanged and left emergency lending measures in place.

The dollar rose 0.8 percent to 89.15 yen JPY= and 1.1percent to 1.0781 Swiss francs CHF=.

The Federal Reserve also is expected to hold interest ratesat a record low near zero when it meets in mid-March. But mostinvestors expect it to raise rates before the ECB does, whichis also lending support to the dollar. Higher interest ratesmake a currency more attractive to global investors.

Data showing a decline in the number of Americans filingfor first-time jobless benefits also stoked hope about the U.S.economy. Markets expect Friday"s employment report to showemployers cut 50,000 jobs last month, though analysts predictsome of that will have been influenced by bad weather.

"The market is being a bit cautious ahead of payrolls, butthat means a better-than-expected number could be positive forthe dollar," said Matthew Strauss, senior currency strategistat RBC Capital Markets in Toronto.

By contrast, he said there are still "uncertainties aboutGreece, about the potential financial assistance it can expect,the opposition from domestic unions," he said. "Uncertainty isstill very much with us, and that"s why the market is notwilling to take the euro much above $1.37."

(Additional reporting by Vivianne Rodrigues) (Editing by Theodore d"Afflisio)

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