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Updated Thursday, December 2, 2010 10:13 pm TWN, AFP

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Euro recovers amid lingering debt worries

LONDON/TOKYO -- The euro rallied slightly from a recent plunge on Wednesday and pressure on Spain eased up, but the eurozone debt crisis still dominated sentiment with Portugal being put on credit watch.

European stock markets rallied, and government bond rates eased a day after Spanish and Italian government 10-year borrowing costs rose to a record wide gap above the rate eurozone benchmark Germany must pay.

The 10-year borrowing rate for Spain eased to 5.30 percent having reached 5.50 percent on Tuesday, and the difference above the rate Germany must pay fell to 2.60 percentage points from 3.0 percent on Tuesday.

Fears that Portugal could follow Ireland and Greece in receive a massive international financial bailout sent the euro sinking to a two-month low under 1.30 dollars on Tuesday.

The single currency recovered a little on Wednesday, standing at US$1.3053 in early London trade compared with US$1.2983 late on Tuesday in New York.

The euro edged up against other major currencies in Asia on Wednesday after falling to a new two-month low on continued worries over Europe's debt woes, dealers said.

The euro fetched US$1.3051 in Tokyo afternoon trade, up from US$1.2985 late Tuesday in New York, where the common European unit had briefly fallen to US$1.2969, its lowest since Sept. 15.

The euro firmed to 108.86 yen from 108.60 yen in New York. The greenback fetched 83.56 yen, also flat from New York.

The dollar lost ground against regional Asian currencies. It fell to SG$1.3152 from SG$1.3191 on Tuesday, to 1,150.65 South Korean won from 1,155.78 and to 9,020 Indonesian rupiah from 9,032. The dollar also fell to NT$30.39 from NT$30.47, to 43.76 Philippine pesos from 44.20 and to 30.04 Thai baht from 30.22.

The dollar was also given a boost by strong U.S. data overnight, with consumer confidence in November hitting the highest level in five months as the holiday shopping season swings into high gear.

The Conference Board said its consumer confidence index rose for the second straight month to 54.1 in November, much better than the 52.0 expected.

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