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REFILE-FOREX-Euro edges up but beset by persisting Greek worries

Published 02/16/2010, 01:59 AM

* Euro inches up on buybacks by short-term players

* But gains in euro limited by Greek uncertainty

* EU adds pressure on debt-laden Greece to cut deficit

* No change in view RBA to raise rates gradually (Corrects paragraph 2 to say ... Juncker ..., not ... Junker)

By Kaori Kaneko

TOKYO, Feb 16 (Reuters) - The euro edged up but remained near nine-month lows against the dollar on Tuesday as the outcome of a meeting of euro zone finance ministers failed to instil confidence that Greece's debt problems will be resolved quickly.

Eurogroup chief Jean-Claude Juncker said euro zone finance ministers had agreed Greece should propose new measures by March 16 to meet deficit targets and if Greece appears to be off course, additional measures will be requested.

The Australian dollar edged up after the minutes from the Reserve Bank of Australia's latest meeting did little to alter expectations that the central bank will gradually raise rates.

Moderate gains in higher-yielding currencies such as the Australian and New Zealand dollars helped to lift the euro slightly, led by short-term players, but the single currency remained under downward pressure, traders said.

"The euro seems to have found some respite at the moment but there are still worries over the risk that more negative news on Greece might emerge," said Ayako Sera, a market strategist at Sumitomo Trust & Banking.

The Eurogroup meeting will continue on Tuesday but the market does not expect further details to come out about Greece's fiscal troubles, traders said.

Traders said the market will be watching further hurdles for Greece, which has two lots of more than 8 billion euros of government bonds to refinance in April and May.

Jonathan Cavenagh, currency strategist at Westpac, said the outcome of Monday's EU meeting did not seem to give a great deal of confidence to markets that the situation will move forward.

"The market is heavy on the euro and it is a sell on a multi-month basis," he said.

The euro was trading around $1.3622, up 0.2 percent on the day but not far from Friday's nine-month low of $1.3532. The single currency has shed nearly 10 percent since late 2009 as worries over whether Greece could service its debt mounted.

Also weighing on the euro were concerns Spain and Portugal could face similar debt problems and Europe's post-recession recovery could falter.

The latest data from the Commodity Futures Trading Commission shows currency speculators ran up a record short euro positions in the week to Feb. 9.

Traders say any positive development out of the euro zone should lead to some of those short positions being unwound, but overall, the sentiment towards the euro remained bearish.

The euro was marginally higher on the yen, climbing to 122.62 yen, from 122.29 yen late on Monday in London. U.S. markets were shut on Monday for a holiday.

Activity in Asia is expected to remain sluggish due to Chinese new year holidays.

The dollar index was down slightly at 80.274, having touched a seven-month high of 80.748 late last week.

Against the yen, the dollar was holding steady at 90.02 yen.

The RBA minutes showed the central bank decided to skip a rise in interest rates this month to better assess the impact of past hikes at home and the effect of sovereign debt stress abroad, though further gradual tightening was likely to keep inflation contained over time.

"The minutes were not necessarily dovish and the RBA is expected to continue its gradual tightening," said a trader at a Japanese bank. "And given positive readings in (Australian) jobs data last week, the Aussie held firm."

The Australian dollar inched up to $0.8904, from $0.8885 late in London on Monday.

But concerns about Dubai World's debts also capped further gains in higher-yielding currencies, traders said.. (Additional reporting by Anirban Nag in Sydney, Satomi Noguchi in Tokyo; Editing by Chris Gallagher)

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