Euro holds firm ahead of German-French summit

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TOKYO: The euro held firm against the dollar in Asia on Friday ahead of a German-French summit amid worries over a new bailout programme for debt-ridden Greece, dealers said.

The euro bought $1.4207 in Tokyo morning trade, hardly changed from New York late Thursday. Against the Japanese currency it also stayed flat, trading at 114.51 yen.

The dollar fetched 80.67 yen, unchanged from New York.

Tension is building over Greece's debt woes, with one European analyst warning of a "Lehman Moment" for the eurozone, referring to US bank Lehman Brothers, whose 2008 collapse preceded the financial crisis.

In Athens Prime Minister George Papandreou appealed for unity from his own lawmakers Thursday after two deputies quit and the International Monetary Fund (IMF) insisted there can be no backsliding on agreed austerity measures.

Officials say they are confident eurozone finance ministers will agree at meetings Sunday and Monday on the disbursement of the latest slice of Greece's 110-billion-euro bailout loan.

French President Nicolas Sarkozy is due to travel to Berlin on Friday to meet German Chancellor Angela Merkel for crisis talks on the eurozone economy.

The euro may rise after the summit as its outcome may build momentum for a breakthrough in dealing with Greek sovereign debt, Barclays Bank Japan chief FX strategist Masafumi Yamamoto said in a note.

Amid a relative lack of major economic indicators, the euro will likely continue to be vulnerable to Greek problem-related headlines, he said.

Market players are also watching an upcoming cabinet reshuffle by Papandreou and a vote of confidence he is seeking after thousands of protesters besieged parliament to protest against the latest wave of austerity cuts.

"Not only the side that is giving the aid, but also the side receiving the aid is getting messy," said a senior fund manager at a major Japanese investment fund. (AFP)