* Investors doubt package can fix roots of euro zone debt woes
* Euro seen moving in $1.25-$1.31 range in near term
* Political uncertainty in UK weighs on sterling
* Mizuho's $8.7 bln share offering plan boosts yen
By Rika Otsuka
TOKYO, May 11 (Reuters) - The euro fell on Tuesday, giving up
some of its gains made the previous day on news of a $1 trillion
package to prevent the spread of the European debt crisis, as
scepticism remains over Greece's ability to cut its large fiscal
deficit smoothly.
Political uncertainty put pressure on sterling as Britain's
two big rival political parties planned to resume courting the
Liberal Democrats after Prime Minister Gordon Brown said he would
step aside to try to keep his Labour Party in power.
[]
"The emergency package is likely to ask Greece to adopt very
demanding steps to cut its debt, raising doubts over whether it
will be able to implement such budget reforms," said Tsutomu
Soma, senior manager of the foreign securities department at
Okasan Securities.
"The emergency package is effective in avoiding a near-term
crisis. But much uncertainty remains for the euro zone."
Moody's Investors Service on Monday said it may still
downgrade Portugal, and Greece's rating could fall to as low as
junk grade. []
Against the dollar, the euro stood at $1.2744 <EUR=>, down
0.3 percent from late U.S. trade on Monday, having returned to
levels seen before the rescue scheme was announced.
The euro fell 0.9 percent to 118.15 yen <EURJPY=R>, a day
after jumping over 2 percent versus the Japanese currency.
European Union finance ministers, central bankers and the
International Monetary Fund hammered out an emergency package
that was the largest in over two years, since G20 leaders rolled
out support for the world economy following the collapse of
Lehman Brothers in 2008. []
Following the announcement of the plan, the euro initially
surged to near $1.31, rebounding from a 14-month trough of
$1.2510 hit on trading platform EBS last week as investors had
feared a sovereign credit crisis could spread from Greece to
other euro zone countries.
"The rally in the euro was short-lived despite the massive
rescue measures," said Tohru Sasaki, head of FX strategy at
JPMorgan Chase Bank in Tokyo. "The euro's weakness is striking."
Traders said the euro is likely to move in a $1.25-$1.31
range in the near term.
The dollar was down 0.6 percent at 92.73 yen <JPY=>. Traders
said the yen was helped by Japanese exporters selling other
currencies.
The yen also got a lift from a Reuters report quoting sources
familiar with the matter as saying Mizuho Financial Group Inc
<8411.T>, Japan's second-largest bank, plans to issue about $8.7
billion of common shares. []
The yen's climb picked up pace as stocks slipped into
negative territory in Asia, prompting investors to reduce risks.
The Australian dollar slid 1.2 percent to 83.28 yen
<AUDJPY=R> after surging over 3 percent on Monday.
MSCI's index of Asia-Pacific shares outside Japan lost 0.8
percent <.MIAPJ0000PUS> after climbing 3.4 percent on Monday for
its biggest single-day percentage gain since May 2009.
Japan's Nikkei average <> was down 0.9 percent. []
Sterling inched down 0.1 percent to $1.4842 <GBP=D4>. It hit
a one-year low of $1.4475 late last week on concerns about the
formation of a new government following last week's inconclusive
election.
A batch of figures released on Tuesday showed China's economy
was in robust health but not overheating as some have feared,
with analysts saying the data could justify Beijing's gradual
approach to tightening so far this year. []
The market showed muted reaction to the data as the debt woes
in Europe continued to draw investors' attention, traders said.
(Additional reporting by Kaori Kaneko; Editing by Michael
Watson)
