Euro falls 1% against greenback but no panic selling

London

THE euro fell one per cent against a buoyant US dollar on Tuesday, as German 10-year Bund yields fell to their lowest since early June and interest rate differentials moved against the shared currency.

The drop in Bund yields and the euro came after the European Central Bank (ECB) left emergency liquidity for Greek banks at current levels but increased the haircuts on the collateral it demands. That kept alive fears that Greek banks will soon run out of cash and that Greece's problems will spread to other southern European countries.