Euro falls on risk aversion as stocks dip

TOKYO: The euro fell on Wednesday as regional equity markets slipped after Slovakia voted down measures to enhance Europe's bailout fund, seen as vital to taming the euro debt crisis.

The euro retreated to $1.3595 and 104.28 yen in Tokyo trade from $1.3636 and 104.52 yen in New York late Tuesday. The dollar fetched 76.68 yen, little changed from 76.65 yen.

The Slovak parliament Tuesday voted against changes to expand the eurozone emergency fund, known as the European Financial Stability Facility. It was the last eurozone country to vote on the proposal, ratified by all 16 others.

"The rejection was in line with expectations and the consensus is that the plan is likely to be approved in a second vote," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

But the news nevertheless chilled sentiment, with Asian stock markets lower as the vote reminded investors of persistent problems in Europe, dealers said.

"The problems have deep roots so the euro is unlikely to show an uptrend anytime soon," Kamei said.

Regional sentiment was also hit as aluminium giant Alcoa's third quarter earnings in the US missed the expectations of Wall Street, helping fuel market fears of a global economic downturn.

The EU and IMF concluded on Tuesday a drawn-out audit of Greece's economic recovery programme, paving the way for bankruptcy-saving loan funds and raising expectations that Greece would avoid default in the short term.

A mission from the two organisations and the European Central Bank said that an 8.0 billion euro loan installment will be available "most likely in early November" following approval by eurozone finance ministers and the IMF.

The euro got a boost earlier this week on improved outlook for the debt crisis after France and Germany pledged swift and incisive action within weeks, specifying that banks would receive help if needed.

Further ahead, the market focus will switch to a meeting of Group of 20 (G20) finance ministers in Paris on Friday and Saturday.

"The problems cannot be totally resolved at the meeting. Even if the participants reach any agreement and produce a joint statement, it would take years to implement," Kamei said. (AFP)