Tuesday January 27, 12:00 PM
Euro climbs on positive German data
LONDON (AFP) - The European single currency on Tuesday advanced against the dollar as data revealed an improvement in German business confidence during January, traders said.
The euro climbed to 1.3271 dollars from 1.3186 dollars in New York late on Monday.
Against the Japanese currency, the dollar increased to 89.64 yen from 89.07 yen on Monday.
Business confidence in Germany, Europe's biggest economy, improved slightly in January, the closely watched Ifo indicator suggested on Tuesday.
The Ifo indicator rose to 83 points in January from 82.7 points in December, its lowest ever reading, the Munich-based Ifo institute said. Economists polled by Dow Jones Newswires had forecast a fall to 81.3 points.
"January's small increase in the German Ifo index provides only limited encouragement given that it remains close to a record low," said Capital Economics analyst Jennifer McKeown.
She added however that the data "suggests that, following ECB interest rate cuts and a German fiscal package, businesses might be seeing some light at the end of the tunnel."
Elsewhere on Tuesday, the dollar rose against the yen as better-than-expected US economic data and a recovery in share prices allayed investor fears over the fallout from the financial crisis, traders said.
"The dollar may have finished bottoming out against the yen," said Ryohei Muramatsu, manager of Commerzbank (Xetra: CBK.DE - news) 's Group Treasury Asia.
The greenback was supported by optimism over US President Barack Obama's 825-billion-dollar economic stimulus package, which traders hope will clear Congress quickly, he said.
Some market players, however, are worried that the plan may be insufficient to fix the crippled US financial system as banks' losses may amount to trillions of dollars.
"During the first 100 days of the presidency, markets will be watching how Obama handles the economy... (and) storing energy for what may come afterwards," said Muramatsu.
US data offered some glimmers of hope. Existing home sales increased 6.5 percent in December, while the Conference Board's composite index of leading economic indicators rose 0.3 percent, defying expectations of a drop.
In London, the pound kept up its rebound after British bank Barclays (LSE: BARC.L - news) said Monday it expected a 2008 pre-tax profit of about seven billion dollars and insisted there was no need for a government bailout.
"This bounce is just from the upside surprise of relatively good news after such a long string of bad news for European currencies," Tsutomu Soma, senior dealer at Okasan Securities, told Dow Jones Newswires.
In London trading, the euro changed hands at 1.3271 dollars against 1.3186 dollars late on Monday, at 118.91 yen (117.46), 0.9362 pounds (0.9422) and 1.5068 Swiss francs (1.4997).
The dollar stood at 89.64 yen (89.07) and 1.1363 Swiss francs (1.1371).
The pound was at 1.4167 dollars (1.3994).
On the London Bullion Market, the price of gold fell to 894.32 dollars an ounce from 910.25 dollars late on Monday.
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