* Euro off lows as Greek bond sale sees solid demand
* ECB holds rates steady, Trichet eyed
* Sterling up as BoE keeps rates on hold
(Adds quotes, updates prices, changes byline)
By Jessica Mortimer
LONDON, March 4 The euro pared losses on
Thursday after Greece's sale of 10-year bonds drew solid demand,
while investors awaited comments from European Central Bank
President Jean-Claude Trichet.
As expected, the ECB held rates at a record low 1.0 percent
[ID:nFAE005615], with the market awaiting any comments from
Trichet's press conference at 1330 GMT on plans for its gradual
withdrawal from emergency lending measures. [ID:nLDE6220UL]
The market focus will be on whether there is any change to
the extra liquidity the ECB has provided for the banking system,
particularly a shift to competitive auctions for three-month
operations, as well as any remarks on Greece.
Greece's highly anticipated bond sale drew strong demand
[ID:nLDE6230PC], but investors were wary of whether the measures
will be enough, keeping the euro below Wednesday's two-week high
versus the dollar.
"We are seeing the euro gain slightly as it looks as though
Greece were fortunate to get the bond away," said Chris Turner,
currency strategist at ING.
"But there are still many execution and implementation risks
and people are reluctant to chase the euro higher."
By 1253 GMT, the euro eased 0.1 percent to $1.3682, off an
earlier low of $1.3634 but staying below the previous day's
two-week high of $1.3736 hit on trading platform EBS.
Greece's bond sale comes a day after it unveiled plans for a
further $6.5 billion in pay cuts and tax hikes to cut its
"If the mood regarding Greece improves further and Trichet
is supportively hawkish, we will likely see the exchange rate
re-test overnight highs," said Daragh Maher, deputy head of FX
strategy at Credit Agricole CIB.
Data on Thursday confirmed euro zone economic growth at 0.1
percent in the last three months of 2009.
Sterling turned slightly higher on the day against the
dollar GBP=D4, hitting a session high of $1.5120 after the
Bank of England left interest rates at 0.5 percent and held fire
on its quantitative easing programme. [ID:nLAC005660]
This was as expected, but analysts said there was relief
among some investors that the bank did not expand QE following
some recent weak UK data.
Elsewhere, the yen was broadly firmer, with the dollar
falling to a three-month low of 88.14 yen, dragged down by falls
in yen crosses and short-term speculators aiming to trigger
loss-cutting orders below 88.00 yen.
Comments from a deputy governor of China's central bank that
Chinese inflation expectations can be controlled [ID:nTOE62301C]
also prompted traders to cut long dollar/yen positions.
The dollar was last down 0.1 percent at 88.31 yen JPY=.
Traders expect it to hold above the psychologically key
88.00 yen level, but direction may be determined by Friday's
U.S. jobs data. ECONUS
The dollar index .DXY was up 0.1 percent at 80.025.
Short-term support is seen around the 79.6 area, its February
(Additional reporting by Tamawa Desai; Editing by Susan