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FOREX-Euro slips as Greek deal remains elusive

Published 13/07/2015, 01:20 pm
© Reuters.  FOREX-Euro slips as Greek deal remains elusive
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* Euro zone says Greece must pass reform laws before bailout talks

* Yen firmer as safety demand rises (Updates prices, adds comments)

By Masayuki Kitano and Ian Chua

SINGAPORE/SYDNEY, July 13 (Reuters) - The euro fell on Monday, hurt by uncertainty over whether a near-bankrupt Greece can secure more funding as its European partners demanded tough reforms in return for throwing a life-line to the debt-strapped nation.

The euro last traded at $1.1145 EUR= , down 0.2 percent on the day. Earlier on Monday, it had slid as far as $1.1090, having stood at $1.11625 in late U.S. trade on Friday.

Against the yen, the euro fell 0.2 percent to 136.65 yen EURJPY=R , having retreated to as low as 135.40 yen earlier on Monday.

Greece was told to push legislation through parliament this week to convince its euro zone creditors to release funds to avert a state bankruptcy and start negotiations on a third bailout programme estimated at up to 86 billion euros ($95.5 billion). ID:nL5N0ZS09X

A draft decision by Eurogroup finance ministers sent to the leaders showed that Greece must enact measures including tax and pension reforms by Wednesday night, and the entire package endorsed by parliament before talks on a bailout can start. ID:nB5N0ZA04S

"Having thought that Sunday was the absolute, final deadline, we now have another absolute, final deadline on Wednesday," said Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore.

The uncertainty has fostered a wait-and-see attitude in markets for now, Henderson said.

The emergency euro zone summit meeting in Brussels was set to reconvene in full session early on Monday, a spokesman for summit chairman Donald Tusk said. ID:nB5N0ZA04V

Analysts expected the euro to bob around $1.10-$1.12 as investors waited to see whether Greek Prime Minister Alexis Tsipras would be able to pass the proposed austerity package amid opposition from his leftist coalition.

"I don't think we are going to get a move of more than 2 percent (in euro/dollar)," said Adam Myers, senior FX strategist at Credit Agricole in London. "However, if there are signs that Greece is going to go out (of the euro zone), then we could have a bigger move."

As the safe haven yen edged higher, the dollar eased 0.1 percent to 122.66 yen JPY= .

Uncertainty about Greece's future in the euro zone will continue to dominate market sentiment for now, traders said, pushing aside the other big elephant in the room - an eventual U.S. interest rate hike.

Last Friday, Federal Reserve Chair Janet Yellen said she expected the Fed to raise interest rates at some point this year. ID:nL1N0ZQ1D4

Boston Fed President Eric Rosengren, one of the Fed's most dovish officials, said September may be the right time to hike rates if the U.S. economy continued to improve. ID:nL1N0ZQ2EW

Investors will also be keeping a wary eye on Chinese stocks, which had bounced sharply for a second day on Friday in a sign that Beijing may finally have stabilised the market after rolling out a raft of supportive measures. ID:nL3N0ZQ2LM

Shanghai shares were up 2.1 percent .SSEC on Monday morning, after having climbed 4.5 percent on Friday.

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