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Euro ends US day lower for second day

NEW YORK: The euro fell again on Tuesday, still dogged by fears that European officials will do little to stop the losses one day after the 14-month old currency endured its steepest decline ever.

At the end of trading, the euro stood at 96.46 cents, down nearly three-quarters of a cent from Monday's closing level and off more than two cents from its overnight peaks, hit in the wake of talk that European central banks might be buying their own currency.

But with no signs that Germany's central bank or the European Central Bank, the policy-maker for the 11-nation region, had intervened and no hints that an interest rate hike is on the way, the euro quickly sagged again.

Hans-Juergen Koebnick, a member of Germany's central bank council, dampened speculation that a rescue mission may be staged for the euro by telling Reuters the currency's drop does not create pressure for the ECB to intervene or hike rates.

"There is just no reason to hold the currency," said Kathy Jones, director of futures research at Prudential Securities, criticising Europe for having neither a designated speaker nor a consistent policy message.

A majority of European analysts polled by Reuters last week expects the ECB will keep rates steady even though inflation rates in the 11-nation region hit the bank's 2 percent ceiling, the highest level in two years, in January.

On Monday when the euro plunged some 3.5 percent in six hours to hit a record low of 93.90 cents, France's central bank governor said he was unhappy with the euro's current level but Europe's Finance Ministers, meeting in Brussels, failed to issue any statement about the euro.

But some analysts were more optimistic about the euro's prospects, saying a string of recently improved growth data should help the euro form a bottom.

"The market is clearly very nervous as shown in the sharp movements we have seen in recent days but Europe's economic numbers are good enough and I think the euro is forming a bottom here," Chase Securities international economist Chris Widness said.

At the same time, there were some signs that America's economy, growing at nearly 7 percent in the fourth quarter of 1999, may show some signs of slowing.

The US consumer confidence index slipped from January's record to 141.8 in February as higher oil prices and rising interest rates hurt sentiment.

Treasury Secretary Lawrence Summers said Europe and Japan need to do more to erase imbalances in the global economy but currency dealers barely reacted to his comments.

Meanwhile the euro also remained soft against the Japanese yen. Although it closed up modestly from Monday's levels, it reamained 2-1/2 yen below overnight peaks.

The dollar remained largely sidelined against the yen, orbiting 110 yen after recovering from Monday's fall in the wake of a euro/yen sell-off. It closed at 110.19 yen.

Overnight, weaker-than-expected Japanese data had reinforced the market's doubts about the nation's economic recovery, traders said.

Japan's industrial output rose a preliminary 0.9 percent in January, seasonally adjusted, from the previous month. Spending by Japanese wage earners' households fell a real 3.0 percent in January from a year earlier, while Japan's unemployment rate stood at 4.7 percent in January -- only a notch below its record high of 4.8 percent. -Reuters