Euro jumps as possible Greek deal takes shape

[NEW YORK] The euro surged Tuesday as the outlines of a possible deal on Greece's finances took form, though a report citing ECB objections took the common currency off its highs.

The euro jumped 1.6 per cent to as high as US$1.1512 as Greece dropped calls for a radical debt restructuring and writedown and said it wanted mostly longer payment terms to give the government more budget resources.

But the euro slipped back slightly to US$1.1479 after the Financial Times said the European Central Bank objected to a key plank in the plan, Athens's desire to issue 10 billion euros (US$11.5 billion) in short-term debt to cover financial gaps while it negotiates a new deal with creditors.

Data that showed US manufacturing output fell for a fifth straight month in December also weighed on support for the greenback.

"The recovery in risk appetite, decline in oil prices and concerns that this week's US economic reports may not live up to expectations triggered profit taking" in major dollar pairings, said Kathy Lien of BK Asset Management.

AFP