FRANKFURT (MarketWatch) -- The British pound fell sharply against the U.S. dollar on Monday, pressured by U.K. election jitters and Prudential Plc's plan to buy the Asian operation of American International Group.

The euro was flat against the greenback, underpinned by media reports of potential financial support for Greece.

The British pound slipped 1.6% to $1.4986 after hitting an intraday low of $1.4963. Ahead of that, sterling fell below $1.50 for the first time since May 2009. On Friday, it traded at $1.5249.

Prudential /quotes/comstock/13*!puk/quotes/nls/puk (PUK 18.50, +0.22, +1.20%) /quotes/comstock/23s!a:pru (UK:PRU 518.00, -86.00, -14.27%) said Monday it will buy AIA, the Asian operation of AIG, for $35.5 billion of cash and stock.

The pound "made another leg lower" on the Prudential news, said analysts at Action Economics on fears that there will be another sterling outflow on the deal. If the deal goes through, the buyer would need to sell sterling to buy U.S. dollars.

"The latest U.K. election polls added to the negative tone after they revealed that the Conservative lead over Labor narrowed to just two points," they said. That raises the risk of a hung parliament, which may hinder deficit-cutting measures.

The U.K. will hold a general election on June 3.

Economic data released on Monday also weighed on sterling. The U.K. CIPS/Markit purchasing managers' index for February was 56.6, unchanged from January, which was a fifteen-year high.

Euro steady
The euro edged down to $1.3603, compared with $1.3618 in late U.S. trading on Friday.

A plan led by Germany and France to bail out Greece with as much as 30 billion euros ($41 billion) was in the works, as German and French officials worked out timing and terms, the Wall Street Journal reported Saturday.

A media report Friday said Germany is considering whether to buy Greek bonds through state-owned bank KfW Group. The move would ease fears that Greece will have trouble tapping the market for much-needed financial support.

/quotes/comstock/11j!i:dxy0
DXY 80.73, +0.30, +0.38%


908580757010MJSNF"While these articles are good news for the euro, we caution that it is early days for these proposed solutions, so any positive impact on the euro is still subject to the ebb and flow of the politics surrounding them," David Forrester, a currency economist at Barclays in Singapore, wrote in a note to clients Monday.

The dollar bought 89.22 yen, up from 88.90 yen late Friday.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 80.73, +0.30, +0.38%) , which measures the U.S. unit against a trade-weighted basket of six major currencies, stood at 80.605, up from 80.379 late Friday.

On Friday, the dollar fell as much as 0.8% against the euro, as a report about the possible deal to help Greece boosted the European currency. See Friday's Currencies report.

Polya Lesova is reporter for MarketWatch, based in Frankfurt.

Lisa Twaronite is MarketWatch's Tokyo bureau chief.


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Feb. 26, 2010 Dollar drops vs. euro on news of Greece deal
Feb. 25, 2010 Dollar falls after early surge on Greek debt fears
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dlsy 5 hours ago0 Votes Request sentGreek Public Sector Union Eyes New 24-Hr Strike March 8
28/2/2010
22:28
ATHENS -(Dow Jones)- Greece's public sector umbrella union, ADEDY, has decided to stage another 24-hour strike later this month in a further sign of protest over the government's austerity measures, a union official said Sunday.

"The executive committee will meet Tuesday to decide the details. That there will be a strike, that has been decided," said Andreas Petropoulos, spokesperson for ADEDY. "It is just the date that hasn't been decided."

In a newscast late Sunday, Greece privately-owned Mega TV station reported that the strike could come March 8.

The strike would be the third declared by ADEDY in the past several weeks, and comes just as Greece's socialist government prepares to announce a new set of austerity measures later this week after a visit by European Union Monetary Affairs Commissioner Olli Rehn on Monday.

The measures, expected to be announced on Wednesday, are expected to target a further EUR4 billion in spending cuts and new taxes, and may pave the way to a European-backed aid package now being negotiated between Greece, Germany and France.

Among the new measures widely expected, the Greek government may announce a sharp cut in public sector pay that includes eliminating one of the two extra-months pay civil servants receive over their normal twelve-month salaries.

Reply Link Track Replies Report Abuse dlsy 5 hours ago0 Votes Request sentUPDATE: Merkel: Euro In Most Difficult Phase Since Creation
28/2/2010
18:33
(Adds details.)

FRANKFURT -(Dow Jones)- The euro is in its most difficult phase since its creation, German Chancellor Angela Merkel told German television station ARD, prereleased ahead of broadcast Sunday evening.

"It now very important that we are aware that it is our joint currency but also that we get to the roots of the current difficulties," she tells ARD, referring to the high Greek deficit as well as lost credibility.

"Therefore I am very grateful that the Greek government plans very courageous cost-saving and austerity measures against the deficit," she said.

"I have said it must now be ensured that the [European] Commission, European Central Bank and also the International Monetary Fund...believe that the Greek consolidation and savings program will actually solve the problems," Merkel said.

Merkel stressed the European Union treaty doesn't allow for the bailout of states and there are no provisions in the German budget for any aid for Greece.
Reply Link Track Replies Report Abuse darkseid 2 hours ago+4 Votes (4 Up / 0 Dn) Request sentMy European friends who live in Germany HATES the Euro and it has been a curse to both of these economies. The prices of goods doubled when it first became the official joint currency of Europe. My friend Elliot complained that a beer was 2 deutchmarks back in 1995 but then the Euro was introduced and it became 2 Euros. However, his pay was cut in half because he made 1 Euro for every 2.5 deutchmarks so his take home purchasing power after socialist taxes went from $25,000 down to $10,000 US equivalent a year in 1999 when Germany first accepted the exchange of Deutchmarks to Euros. The European Union has robbed it's citizens of more than half their earnings and are laughing all the way to the bank. It benefits them but destroys the wealth of it's citizens. It doesn't work for the economy but central banks love joint currencies because they profit heavily from them even if it fails. I would go as far as to say they will pull the same tricks here in North America, Asia, and Africa to see what they can get away with.Reply Link Track Replies Report Abuse oriocookie9 44 minutes ago-1 Vote (0 Up / 1 Dn) Request sentnot a happy customer i see .... same thing happened everywhere in EU .. and it is not fair to blame governments and banks .. did you complain when you saw the beer go from 2 DM to 2 EU ? did you stop BUYING it ... no .. so it is our fault for not shouting loudly enough .... and yeah some peple are laughing their way to the bamk cause they think we are stupid ... other than that ... inflation in 1995 to 2010 would have made your beer 5DM by now ... so quit complaining and vote the right person to govern you and not who carries your fancy at the moment ...Reply Link Track Replies Report Abuse StarlightDave 36 minutes ago0 Votes Request sentAnybody else find it messed up that a computer is keeping the USD/JPY between 89.3 - 89.35 so a big player can short it at a premium price at 8:30 ... ?Reply Link Track Replies Report Abuse « «
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My European friends who live in Germany HATES the Euro and it has been a curse to both of these economies. The prices of goods doubled when it first became the official joint currency of Europe. My friend Elliot complained that a beer was 2 deutchmarks back in 1995 but then the Euro was introduced and it became 2 Euros. However, his pay was cut in half because he made 1 Euro for every 2.5..."

- darkseid | 4:37 a.m. Today4:37 a.m. March 1, 2010

+4 Votes (4 Up / 0 Down) First Take
Airlines buffeted by more than storms

There are more bumps ahead for the traditionally volatile sector.

3:39 p.m. Feb. 26, 2010 | Comments: 2

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