* Euro pulls back from early November low
* Sterling hits near-two month low vs dollar, then recovers
* UK's Darling keeps 2010 growth forecast of 1 to 1.5 pct
(Recasts, adds quotes, updates prices, changes dateline,
previous LONDON)
NEW YORK, Dec 9 (Reuters) - The euro recovered against the
dollar on Wednesday, pulling off its lowest in more than a
month that it hit after Greece's credit rating was downgraded
in the prior session, as investors decided the move was too
far, too fast.
The dollar had advanced broadly on Tuesday after ratings
agency Fitch downgraded Greece to below the single-A bracket
for the first time in a decade. Gains were bolstered by short
covering in the U.S. currency and the yen.
In Asia traders shed higher-risk and higher-yielding
currencies and assets, including the euro, after Fitch cut
Greece's sovereign debt to BBB+ from A-.
The euro <EUR=> fell to its weakest since early November,
but later reversed those losses on the view that the weak state
of Greece's public finances was well known and that the
currency's move had overshot.
Still, investors were rattled by news from ratings agency
S&P, which revised its outlook on Spain to negative on
Wednesday, although this did not come as a complete surprise.
A rise in European equity markets and U.S. stock futures
illustrated the move away from the safety flight into the U.S.
dollar.
"Today, there is a slight pullback (in the dollar) with a
slight rebound in risk assumption," said John Doyle, foreign
exchange strategist at Tempus Consulting in Washington. "But
the dollar may be regaining its footing. There are a lot of
dollar buyers out there."
ECB Governing Council member Axel Weber said on Tuesday
there was no need for external financial handouts for Greece.
[]
In early New York trade, the euro was up 0.1 percent at
$1.4719.
The dollar index <.DXY>, a calculation which tracks the
dollar's performance against a currency basket, was down 0.4
percent at 75.98, having earlier risen as high as 76.331, its
strongest since early November.
STERLING IN FOCUS
Sterling <GBP=> was down 0.2 percent at $1.6247, after
having fallen earlier to its lowest against the dollar since
mid-October. It has traded in a range of between $1.6168 and
$1.6374 on Wednesday.
The British economy will grow by 1 to 1.5 percent in 2010,
finance minister Alistair Darling predicted on Wednesday,
sticking to the forecast he made in the April budget.
But Darling admitted the recession had turned out to be
deeper than he predicted in April. He said he expected the
economy to shrink 4.75 percent in 2009, instead of the 3.25 to
3.75 percent decline originally predicted. []
[]
To be sure, with concerns about Greece still recent and
anxiety surrounding the health of Dubai's financial sector,
risk demand remained low. This pushed up the yen, which tends
to benefit from low risk appetite.
The dollar <JPY=> fell 0.5 percent on the day to 87.91 yen,
edging closer to a 14-year low hit late last month, when fears
over Dubai's debt problems prompted investors to cut carry
trades and risk exposure.
Market participants said gains in the yen were triggered by
selling in euro/yen <EURJPY=>, which fell to its weakest in
since late November.
The yen rose even as data on Wednesday showed Japan's
economy grew 0.3 percent in the third quarter, sharply less
than a preliminary estimate. []
(Reporting by Nick Olivari, Editing by Chizu Nomiyama)
