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Published: Monday July 2, 2012 MYT 3:27:00 PM

Euro dips as EU deal rally fades


LONDON: The euro dipped and German bond prices rose on Monday as the euphoria over the latest measures to ease Europe's debt crisis ebbed and tepid manufacturing data from Asia raised concerns about the health of the global economy.

Riskier assets including equities, commodities and the single currency gained sharply on Friday after euro zone leaders agreed to allow their new bailout fund to inject money directly into banks from next year and intervene in bond markets.

"While the policies agreed by EU Leaders are a step in the right direction they are on their own unlikely to resolve the euro-zone sovereign debt crisis," Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ said.

The euro fell 0.3 percent to $1.2625, after spiking 1.7 percent against the dollar to a high of $1.2693 on Friday, its biggest one-day jump in eight months.

Yields on the 10-year German government bond eased 3 basis points to 1.55 percent as prices rose, and gold also edged down 0.3 percent to $1,591.64 an ounce.

European equities were around seven-week highs, with the FTSEurofirst 300 of top companies up 0.1 percent at 1,022.68 points, but gains were capped by the weakening growth outlook and Germany's stock market opened lower.

Purchasing managers surveys in the major exporting nations of China, Japan, South Korea and Taiwan all showed demand from importing centres such as Europe and the United States to be weaker than expected in June. - Reuters

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