Euro sluggish in Asian trade

TOKYO: The euro remained under pressure in Asia Monday as investors focused on European moves to stave off a Greek debt crisis, and gave a muted response to Japan's latest economic growth figures.

The euro dropped to 1.3612 dollars in Tokyo morning trade from 1.3629 in New York late Friday, while edging up to 122.73 yen from 122.61.

The dollar rose to 90.18 yen from 89.96.

Dealers said the market's attention was turned to a meeting of European Union finance ministers on Monday and Tuesday in Brussels.

They are expected to back measures to instil some budgetary discipline in Greece amid concerns that its swollen public deficits and massive debt levels threaten the 16-nation eurozone as a whole.

"We are monitoring the meeting by EU finance ministers," said Hideaki Inoue, chief forex trading manager at Mitsubishi UFJ Trust and Banking Corp. "Credit fears in Europe are still the biggest concern for the market.'

The European currency has been hit by worries that Greece's debt crisis will spread in the eurozone, and by EU data showing that Europe's economic recovery has stalled.

The heavyweight German economy ground to a halt in the fourth quarter of 2009 and Italy slumped back into contraction, while growth in the 16-nation bloc rose a meager 0.1 percent in the final quarter, new data showed Friday.

The market also focused on the People's Bank of China announcement that raises banks' deposit reserve ratio by 50 basis points as of February 25, the second increase since the start of the year.

The hike in the ratio -- the minimum amount of money that banks must keep in reserve and not use for lending or other purposes -- was seen as the latest sign that Beijing is moving to prevent its economy overheating.

The move prompted investors to buy the safe-haven dollar, dealers said.

China now leads the global economy," said Masatsugu Miyata, forex dealer at Hachijuni Bank. "Its impact is inevitably large."

Japan announced its economy grew 1.1 percent in October-December from the previous quarter, for an annualised pace of 4.6 percent. For the whole of 2009, Japan stayed just ahead of China as the world's number two economy.

But the market impact of the Japanese data was muted, even though the latest quarterly performance was slightly better than expected.

Asian trade was thin with many markets in the region closed for the Lunar New Year, and US markets shut for a national holiday.