Spanish
yields trade near 6 pct
* German ZEW slightly better than expected
* Speculation BOJ may ease policy weighs on
yen
NEW YORK, Sept 18 (Reuters) - The euro
slipped against the
dollar
for a second straight day on Tuesday as some investors
bet
that the currency had risen too far, too fast a day after it
touched
a four-month high, given a renewed focus on debt-laden
Spain.
Pressure is growing on Spain to request aid
and trigger a
European
Central Bank bond-buying program, something seen as
inevitable
to help the country finance its debts, with benchmark
10-year
Spanish bond yields rising to just over 6 percent.
Spain's deputy prime minister, Soraya Saenz
de Santamaria,
said
on Tuesday the government was still considering the terms
of
a European bailout, a condition of ECB help. The remarks
weighed
further on investors' patience.
The euro has risen some 8 percent since
hitting a two-year
low
around $1.2040 in July, fueled by aggressive central bank
actions
in both Europe and the United States to help their
struggling
economies. That euphoria, however, is starting to
wear
off.
Even if Spain does request assistance,
analysts say doing so
may
not be a positive sign for the euro as the tough spending
cuts
that come with the aid would put further pressure on an
economy
already in recession.
"You are looking at a Spanish economy
that has 25 percent
unemployment
and a huge overhang of residential mortgages," said
Lane
Newman, director of foreign exchange trading at ING Capital
Markets
in New York. "Even if you write a lot of those down, you
are
still talking about fiscal austerity, so you can't grow your
way
out of arguably a recession."
The euro fell 0.6 percent to $1.3038, with
traders
reporting
selling by Europeans. It hit a high of $1.3169 on
Reuters
data on Monday, the highest level since May 4. Option
barriers
were seen around $1.32.
The single currency failed to react to a
slightly
better-than-expected
German ZEW survey of analyst and investor
sentiment
showing a rise in September after four months of
decline.
The euro fell 0.4 percent against the yen
to trade at 102.80
yen,
having rallied to a four-month high on Monday.
The
dollar climbed back in afternoon New York trade to rise
0.2
percent against the yen to 78.85 yen, just off the
session
peak of 78.87 yen. It rose as high as 78.92 yen on
Monday
on buying by speculative accounts such as hedge funds,
traders
said. It hit a seven-month low of 77.11 yen last
Thursday.
Speculation is growing that the Bank of
Japan might loosen
policy
following a policy meeting on Wednesday after the U.S.
Federal
Reserve launched a fresh round of monetary stimulus last
week.
"We expect the Bank of Japan to
increase its asset-buying
fund
by 5 trillion yen ($63 billion). If it does, the dollar
might
have a chance to break resistance around 79.50 yen.
Alternatively,
if it doesn't, the dollar will fall below 78
yen,"
said Osamu Takashima, chief Japan FX strategist at
Citibank
in Tokyo.
The Australian dollar slipped 0.3 percent
to $1.0439,
pressured
by worries that slower growth in China would put the
brakes
on Australia's mining boom.
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