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Euro struggles as Greek debt talks collapse

TOKYO: The euro lost more ground against the dollar in Asia on Tuesday after talks between Greece and its creditors collapsed, fanning fears that the country will tumble out of the eurozone.

In Tokyo, the common currency fell to $1.1357 from $1.1390. However, it edged up to 134.70 yen from below 133 yen in early Asian trade Tuesday and 134.53 yen in London on Monday. US markets were closed Monday for a holiday.

“Greece and Germany came to the talks with different preconditions, and the lack of compromise is weighing on the euro,” Yuji Saito, director of foreign exchange at Credit Agricole SA in Tokyo, told Bloomberg News.

The dollar was at 118.55 yen, compared with 118.47 yen.

A closely watched meeting Monday broke down without agreement on Greece’s debt after Athens refused eurozone finance ministers’ demand that it must apply for an extension to its current bailout.

Eurogroup head Jeroen Dijsselbloem said the country had the rest of the week to make the request, with the 240 billion euro lifeline expiring at the end of the month.

But an Athens source dismissed the demand to stick to its current bailout as “absurd”.

Greece’s new far left-led government swept to power last month on a platform of overhauling the terms of the austerity-laden financial aid package, which it says has hammered the economy.

Finance Minister Yanis Varoufakis is looking for a six-month bridging loan to give Greece time and financial help to negotiate a new deal.

However, the 18 other eurozone nations, led by Germany, say any changes must pass within the current programme.

On Tuesday, the Bank of Japan kicked off a two-day policy meeting but few analysts expect it to announce fresh stimulus.

Data showed the economy limped out of recession in the last quarter of 2014, with a weaker-than-expected 0.6 percent expansion — or 2.2 percent on an annualised basis.

Economists had widely expected a stronger 0.9 percent expansion on-quarter.

Over the full year, the preliminary data showed zero growth, compared with a 1.6 percent expansion in 2013.

The dollar was mostly stronger against a basket of Asia-Pacific currencies.

It rose to Tw$31.51 from Tw$31.39 on Monday, to Sg$1.3553 from Sg$1.3545, to 62.16 Indian rupees from 62.15 rupees, to 44.27 Philippine pesos from 44.25 pesos, and to 12,761.50 Indonesian rupiah from 12,757.50 rupiah.

The greenback weakened to 32.58 Thai baht from 32.59 baht, while it was also at 1,101.94 South Korean won from 1,101.21 won.

The Australian dollar rose to 78.00 US cents from 77.92 cents. The Chinese yuan was weaker at 18.95 yen from 19.00 yen. -AFP

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