Euro surging as European leaders near Greek deal

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NEW YORK (AP) — The euro surged Thursday as European leaders appear set to approve a second bailout for Greece meant to help that country avoid default and possibly, prevent a broader crisis.

German Chancellor Angela Merkel said European officials want to tackle the “root” of the crisis by easing Greece’s debt burden. Terms reportedly include help from private lenders, which would put Greece into partial default. That’s been a sticking point with the European Central Bank.

But reports that the ECB will continue to help support Greece, even if ratings agencies call the terms of the aid deal a default, helped support the euro, says David Gilmore of Foreign Exchange Analysts in Essex, Conn. That would be a reversal from the ECB’s previous stance.

The euro rose to $1.4397 in late morning trading in New York from a low of $1.4137 earlier in the day. On Wednesday, the euro was worth $1.4229.

While the Europeans’ deal means they’re making progress on their debt problems, the U.S. “seems stuck with a stalemate and significant chance of a downgrade” because of the political impasse on lifting the debt limit, said GFT currency analyst Kathy Lien. Without an agreement to raise the government’s borrowing authority, the U.S. government could default on its debt, sending financial markets into chaos.

The dollar was broadly lower in other trading Thursday. The British pound jumped to $1.6296 from $1.6162. The dollar fell to 78.57 Japanese yen from 78.80 yen, edged down to 0.8187 Swiss franc from 0.8191 franc and dipped to 94.35 Canadian cents from 94.74 cents.