NEW GREEK FEARS PUT PRESSURE ON EURO - The euro has fallen sharply against the dollar and the pound. This morning, it is down by more than a cent, or 1%, against the dollar. Against the pound, it fell by more than half a penny.
Some of this is down to a strengthening dollar on hopes of a US recovery, but it is more to do with ongoing problems in Greece.
Last month, European leaders agreed to provide €22 billion, should Greece run into difficulties in borrowing money to service its high debt levels. According to its finance minister, the country cannot borrow at current rates for long.
KBC Bank economist Austin Hughes said the market seemed to be focusing on differences between the type of help Greece wanted, and the type that its European partners were prepared to offer.
The EU deal offered help as a last resort, but Greece needed continuing help to bring its borrowing costs down. The economist said - as the deal stood - assistance would kick in only when Greece failed to secure funding from the markets.
At current borrowing rates, the country needs to cut even deeper, which the market believes is unsustainable. 'Something has to give,' he said, adding that the markets were unsure whether this would be Greece, Germany or the euro.
KBC Bank and Chartered Accountants Ireland also this morning published a survey of business sentiment. Mr Hughes said the survey was showing an improvement in manufacturing, spreading into the business services sector.
He said the survey showed that more firms feel things will get better between now and the summer, the first time this had happened in two years.
The economist said businesses were starting to move from a focus on cutting costs, to measures needed to prepare for a recovery. The vast majority of firms said the worst of their cutbacks had already taken place. Mr Hughes said the recovery would be very uneven, and had already started in some sectors.
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CURRENCIES - The euro is trading at $1.3360 and 87.62p sterling.
