NEW DELHI (Reuters) - The Congress party is seen to be close to nominating Finance Minister Pranab Mukherjee to be the country's next president, creating an opening to take charge of an economy battered by policy gridlock, inflation, and sluggish investment.
In the March quarter, growth in Asia's third-largest economy skidded to a nine-year low of 5.3 percent even as inflation rose to nearly 7.6 percent in May.
Wide current account and fiscal deficits have battered investor sentiment and recently sent the rupee tumbling to a record low, raising the spectre of a balance of payment crisis like the one India faced in 1991.
Known as a Congress trouble-shooter, Mukherjee has been thwarted by a fractious ruling coalition from pushing through reforms, and it's not clear whether his successor would get better results.
In the absence of an obvious successor, talk in New Delhi also suggests Prime Minister Manmohan Singh could take the finance portfolio, possibly on an interim basis. Singh was finance minister during India's 1991 crisis, pushing through reforms that unleashed two decades of faster growth.
If he does opt for a full-time finance minister, there are several names doing the rounds. Following are profiles of some of the probable candidates that Prime Minister Manmohan Singh and his party chief Sonia Gandhi may look to replace Mukherjee.
JAIRAM RAMESH, 58, rural development minister
An economist, the MIT graduate is seen as close to the Gandhi family. He was one of the backroom players who shepherded the Congress party's election campaigns in 2004 and 2009.
Articulate and media savvy, Ramesh supports cutting fuel subsidies and opening up the supermarket industry, which he opposed earlier.
In a recent interview with a local business daily, he said time for "pussyfooting" on major economic reforms was over and the government needed to "take the bull by its horns".
To his advantage, Ramesh is able to build rapport with alliance partners as well as opposition parties. At a time when the government has been left hamstrung by unruly allies, Sonia Gandhi could settle for a person who can bring partners on board to push divisive reforms needed to revive the economy.
However, he carries an image of being anti-development. As an environment minister, he had red-flagged several mining and infrastructure projects on environmental concerns.
C RANGARAJAN, 80, chairman of the Economic Advisory Council to the Prime Minister
Seen as a dark horse in the running for finance minister, he is one of the most trusted aides of Prime Minister Singh.
Rangarajan has worn various hats both within and outside the government, and would bring long experience to the job. Unlike other contenders, he has generally avoided controversy.
He is widely perceived as a hawk who frowns upon expansionary fiscal policy and high inflation, and is an advocate for fuel subsidy reforms and long-pending financial sector reforms. He favours building consensus before allowing foreign investment in multi-brand retail and aviation.
However, Rangarajan is not seen as a political heavyweight, even though he was governor of Andhra Pradesh for six years and was a member of the Rajya Sabha. Congress is seen to prefer a politician who can deliver votes in the 2014 parliamentary elections.
ANAND SHARMA, 59, trade minister
A lawyer-turned politician, Sharma is perceived to be reform-oriented and enjoys the confidence of the Gandhi family.
He is credited with arresting the slide in India's exports after taking over as trade minister in 2009 through a combination of bilateral trade agreements and diversification of export markets. He has also overseen bold steps to liberalise trade ties with arch-rival Pakistan.
Sharma has been pushing for liberalising foreign direct investment rules and succeeded in getting the government's approval for allowing foreign direct investment (FDI) in multi-brand retail, an initiative thwarted by coalition allies. Permitting FDI in the aviation sector is the next big ticket item on his agenda.
Sharma's stature in the party could be a handicap. He is not seen as a political operator and does not bring a large base of political support. Blame for the embarrassing flip-flop on FDI in retail is often put at his doorstep.
P CHIDAMBARAM, 66, home minister
A familiar face and a senior party stalwart who held the post during the global financial crisis in 2008.
His deft handling of the situation then, helping India avoid the worst of the downturn, makes him a leading candidate to take over an economy mired in the doldrums.
Although it's been nearly four years since he moved over to the interior ministry, his heart is seen to be in his previous job. Former colleagues from the finance ministry recall him as having an eye for detail and cannot be bluffed.
Considered to be a reform-oriented taskmaster and a market friendly face, Chidambaram enjoys the confidence of both Prime Minister Singh and Sonia Gandhi.
But an image of "intellectual arrogance" has earned him detractors both within and outside the party.
He is also under siege. Opposition parties question his role in a multi-billion dollar telecoms scam that has undermined the Congress-led government. His family is under scrutiny over a controversial telecom deal. Chidambaram, himself, is battling charges of rigging his election to parliament in 2009.
MONTEK SINGH AHLUWALIA, 68, deputy chairman, Planning Commission
The Oxford-trained economist has been a key figure in Indian economic policy since the mid-1980s. He is an influential adviser to the prime minister and is also India's Sherpa for the G20 Summit.
A supporter of open markets, he has been pushing the government to implement long-pending reforms like ending controls on fuel prices, lifting caps on foreign stakes in the insurance sector and allowing in foreign supermarkets.
He is close to Singh and was a key member of the team that navigated the economy out of the 1991 balance of payment crisis.
Ahluwalia is said to harbour political ambitions and was seen as front-runner for finance minister in 2009, but was thought by Congress to be too market friendly. A lack of political base also went against him.
He has also been hurt by controversies, including the definition of a poverty line at 32 rupees a day.
(Reporting by Rajesh Kumar Singh; Editing by Tony Munroe and Ed Lane)
FOREX-Euro steady on expectations of central bank action - Reuters UK
(Updates prices, adds analyst comment)
* Central banks' liquidity pledge reassures investors
* Soft U.S. data keeps speculation of Fed easing alive
* Yen broadly gains after BOJ stays on hold
By Anirban Nag
LONDON, June 15 (Reuters) - The euro hovered below three-week highs against the dollar on Friday, holding steady on expectations that global central banks will step in to counter any adverse fallout from Sunday's election in Greece.
G20 officials told Reuters that central banks from major economies stand ready to take steps to stabilize financial markets by providing liquidity and preventing a credit squeeze if the Greek election result roils markets.
A coordinated action is likely to support risk appetite and provide relief to the euro although any bounce could prove temporary given Spain's elevated borrowing costs and the risk of contagion to Italy, the euro zone's third largest economy.
The dollar was also under pressure on expectations the U.S. Federal Reserve may resort to further monetary easing after labour market data disappointed and consumer prices fell in May.
The euro dipped 0.1 percent on the day to $1.2619, still within sight of Monday's three-week high of $1.2672, struck after a 100 billion euro aid package for Spanish banks was agreed at the weekend. The dollar index fell to a three-week low of 81.703 against a basket of currencies.
Much of how the euro will trade in the near term depends on the outcome of the Greek election on Sunday. Traders cited offers to sell above $1.2660 up to $1.2670 while option expiries were cited at $1.2600.
"Investors will be reluctant to hold any meaningful positions either way going into the weekend," said Ankita Dudani, G10 currency strategist at RBS.
"The euro has come back from highs around $1.2650 and the only reason it will hold above $1.2500 is because of the extreme bearish positions and hopes of coordinated central bank action."
Hopes for more policy steps by major central banks were heightened after the UK government and the Bank of England unveiled a 100 billion pound ($155 billion) funding scheme for banks to boost credit on Thursday.
Traders said the euro had scope to post short term gains if Greece's pro-bailout parties manage to win a majority in Sunday's election. In a scenario where the far-left anti-bailout parties win, the euro could drop towards near two-year lows of $1.2288 struck earlier this month.
The uncertainty was reflected in the options market, where both one-week and one-month implied volatilities traded at elevated levels of 16.50 percent and 12.65 respectively, up from around 9.8 percent and 11.55 percent at the end of last week.
BEARISH POSITIONS
In the past few weeks, speculators have added to very large bearish bets against the euro as many positioned for an eventual exit by Greece from the single currency and a possible spread of contagion to the bigger economies of Spain and Italy.
Spanish and Italian bond yields eased on Friday, but still remained near levels considered unsustainable to borrow from capital markets. The deteriorating situation in the euro zone has galvanised policymakers to consider taking action ahead of a G20 summit next week.
European Central Bank President Mario Draghi said on Friday the bank was ready to support euro zone banks, should it be required, while Bank of Japan Governor Masaaki Shirakawa said central banks can offer liquidity to calm markets in case the weekend Greek elections heighten tension.
The dollar and euro came under pressure against the yen after the Bank of Japan announced no change in its monetary policy. Analysts said some investors may have positioned for a more dovish stance and were buying back the yen as a result.
"There were a few expectations the BoJ may have pre-empted any further Fed easing by deciding to expand their asset purchasing, so there is a little bit of disappointment this morning," said Michael Sneyd, FX strategist at BNP Paribas.
The dollar fell 0.8 percent to 78.77 yen, while the euro dropped 1 percent on the day to 99.10 yen. (Additional reporting by Nia Williams; Editing by Catherine Evans)
Daily Forex Update: USD/CAD - eltee.de
Euwax Trends: Anleger setzen auf Notenbank-Hilfe nach Griechenland-Wahl - Aktien auf dem Weg nach oben - bisher ruhiger Verfallstag
Brse Stuttgart - Indizes - 15.06.2012
Die ganz groe Angst vor den Wahlen in Griechenland am Sonntag scheint sich gelegt zu haben. Die Optionen, die der Markt derzeit durchspielt, lauten wie folgt: Erstens, die Euro-Befrworter unter Fhrung der Nea Dimokratia gewinnen. Dann wrden die Griechen die Sparauflagen anerkennen und vorerst im Euro bleiben. Zweitens, das Linksbndnis und damit die Gegner der Sparauflagen setzen sich durch. Fr diesen Fall deutet sich an, dass die Notenbanken am Montag fr eine konzertierte Aktion bereit stehen, in der sie die Banken und Finanzmrkte mit ausreichender Liquiditt versorgen. ... mehr
ETX Capital: Der Fahrplan zur Euro-Union
O. Bossmann I ETX Capital - Forex - 15.06.2012
Der Countdown fr die europischen Politiker luft und die Erwartungen der europischen Brger und nicht minder der Mrkte scheinen klar zu sein, in den nchsten Wochen sollte eine nachhaltige Vision fr den Euro geschaffen werden.
Nach der Herabstufung der Bonitt Spaniens durch Moodys von A3 auf Baa3 diese Woche notieren spanische Staatsanleihen mit einer Laufzeit von zehn Jahren nahe der sieben Prozent Marke. Mit diesem Kredit Rating befinden sich spanische Staatsanleihen, zumindest aus Sicht von Moodys, auf der letzten Stufe vor dem sogenannten Junk Status. ... mehr
Dax klettert im frhen Handel - Freundliche US-Vorgaben aus bersee sttzen
IG Markets Research - Indizes - 15.06.2012
Der deutsche Aktienmarkt startet im Windschatten positiver Vorgaben mit einem Plus in den Wochenausklang. Trotz wieder mal enttuschender Arbeitsmarktdaten, verlieen die US Aktienindizes den gestrigen Handel in der Gewinnzone. Denn gerade solch maue Konjunkturdaten knnten die US Notenbank Fed dazu animieren, die schleppende Wirtschaftserholung mit einer neuerlichen Ausweitung ihrer expanisven Geldpolitik zu sttzen. Und genau darauf scheint der Markt derzeit zu spekulieren. ... mehr
4x Report: Aktienmrkte im Vorfeld der Griechenland-Wahl abwartend - Schweizer Bankenwerte im Minus
Brse Stuttgart - Indizes - 15.06.2012
Marktbericht der Brse Stuttgart - Auslandsaktien KW 24 (11.06. bis 15.06.2012)
Die US-Brsen tendierten in der Berichtswoche seitwrts. Im Vorfeld der Griechenlandwahl am kommenden Wochenende bewegte sich der Dow-Jones-Index um die 12.500-Punkte-Marke, der Nasdaq Composite lag bei 2.800 Punkten und der S&P 500 pendelte sich bei 1.320 Punkten ein. Der Goldpreis konnte mit Blick auf Griechenland und Europa knapp zwei Prozent zulegen und verteidigt nun die Marke von 1.600 US-Dollar. Auch der Silberpreis zog um zwei Prozent an und notiert nun bei 29 US-Dollar. ... mehr
Forex Update - Anleger spekulieren vorsichtig auf einen positiven Ausgang der Wahlen in Griechenland
IG Markets Research - Forex - 15.06.2012
Marktteilnehmer am Devisenmarkt erwarten mit Spannung die anstehenden Wahlen in Griechenland. Gestern stiegen die Aktien griechischer Bankaktien um knapp 20 Prozent. Laut Reuters-Berichten waren der Grund fr diesen Anstieg Marktgerchte, dass Sparbefrworter die Wahl am 17. Juni gewinnen werden.
Die Europische Zentralbank und andere Zentralbanken halten sich mit weiteren Geldspritzen bereit, um bei einem Sieg der linksradikalen Syriza Sttzungsmanahmen ergreifen zu knnen. ... mehr
Aktienindizes: Verzaubern die Hexen den DAX zum Wochenschluss?
Jens Klatt I FXCM - Indizes - 15.06.2012
Der deutsche Leitindex stellte sich auch am gestrigen Handelstag sehr choppy dar. Der Handel kann durchaus als richtungs- und impulslos klassifiziert werden, was allerdings vor dem Hintergrund des groen Verfalls an der EUREX heute ("Hexensabbat") keine wirkliche berraschung darstellt. Wenn man sich die unteren Zeitebenen genauer betrachtet fllt auf, dass der DAX seit Dienstag in einer Range zwischen 6.220 und 6.080 Punkten tradet. So ging es dann auch am gestrigen Handelstag in eben dieser Range aus dem Handel. Zum Ende der US-Handelssitzung notierte der DAX bei 6.140 Punkten. ... mehr
Devsienkommentar: EUR/USD - Der Euro bleibt kurzfristig Long, Attacke auf das Wochenhoch zum Wochenschluss?
Jens Klatt I FXCM - Forex - 15.06.2012
Es bleibt dabei und der gestrige Handelstag hat es besttigt: der EUR/USD bleibt kurzfristig auf 4-Stundenbasis Long. Das Whrungspaar tradet weiter in seinem Aufwrtstrendkanal (trkis). Wie bereits am gestrigen Handelstag erwartet, war der Weg mit dem berwinden der 1,2570er Marke der Weg in Richtung 1,2600 USD geebnet. Mit den positiven Vorgaben von der Wallstreet nahm der EUR/USD infolgedessen Fahrt auf und attackierte das Hoch von Mittwoch bei 1,2610 US-Dollar. ... mehr
Dax Future - trading-notes [futures] 15.06.2012
trading-house.net - Indizes - 15.06.2012
Einen Tag vor dem Verfallstag bewegte sich der Future wie erwartet erst mal nach der Erffnung runter, danach folgten kurze Aufwrtsbewegungen, die genauso schnell wieder zu ende waren. Am Nachmittag fand er seinen Boden bei 6.090 Punkten und startete von hier aus eine Erholungsrallye von 60 Punkten, angetrieben von den US-Brsen. Der Handelstag war ein typischer Vorverfallstag und drfte er erste Indikator fr den heutigen Tag geben. Am Ende schloss er bei 6.145 Punkten ein Plus 0,2 Prozent. ... mehr
Forex - Im Vorfeld der griechischen Parlamentswahlen handelt der EUR in einer engen Handelsspanne
Forexyard Research - Forex - 15.06.2012
Trotz steigender spanischer und italienischer Anleihen-Renditen, die viele Analysten zum Anlass nahmen zu prognostizieren der Euro wrde sich zu seinen Haupt-Whrungsrivalen rcklufig verhalten, verzeichnete die Gemeinschaftswhrung beim gestrigen Handel kaum nennenswerte Bewegungen. Whrend wir aufs Wochenende zugehen, sollten Euro-Hndler besonders den Bekanntmachungen aus Griechenland Aufmerksamkeit schenken, die Aufschluss darber geben knnten, welche der politischen Parteien bei der Wahl am Sonntag als Sieger hervorgehen drften. ... mehr
Technische News Devisen vom 15.06.2012
Forexyard Research - Forex - 15.06.2012
EUR/USD
Whrend sich die Bollinger Bands auf dem Tages-Chart verengen, was darauf hindeutet, dass in nchster Zeit eine Kursbewegung erfolgen knnte, zeigen die meisten anderen technischen Indikatoren, dass sich diese Paarung im neutralen Bereich bewegt. Eine abwartende Haltung einzunehmen drfte sich fr Hndler als beste Vorgehensweise erweisen.
GBP/USD ... mehr
India finance minister stepping down to run for president: TV stations - CNBC
NEW DELHI (Reuters) - India's Finance Minister Pranab Mukherjee will step down on June 24 to contest the presidential election, television channels reported on Friday, clearing the way for a cabinet shakeup at a time when the government is struggling with a faltering economy.
The ruling Congress party was due to meet its coalition allies on Friday to finalize its presidential candidate. Party sources have said that Mukherjee is the front-runner for the largely ceremonial position, although a key ally this week rejected his candidacy, throwing the race into turmoil.
Without the support of West Bengal chief minister Mamata Banerjee, Congress and its remaining allies in the coalition government have about 38 percent of the votes in the electoral college that will elect the president. The party was lobbying left-wing parties on Friday to get past the 50 percent mark.
"The finance minister may resign once the prime minister is back from the G20 (summit), probably on the 24th if his name is finalized as a presidential candidate," a source close to Mukherjee told Reuters.
The source said Prime Minister Manmohan Singh was expected to take over the finance portfolio temporarily, at least for the "next few months", the source said, speaking on condition of anonymity because Mukherjee's candidacy had still to be confirmed.
Singh, the architect of landmark economic reforms in 1991, has been widely criticized for what investors and business leaders see as weak leadership on the economy.
His fragile coalition government has been battered by a series of corruption scandals and policy flip-flops on major economic reforms and has struggled to formulate a strategy to boost its flagging economy, arrest rising inflation and narrow widening fiscal and current account deficits.
(Reporting By Rajesh Kumar Singh, Arup Roychoudhury, Editing by Ross Colvin and Ed Lane)
Debt crisis: Rich Greeks in London face tax investigation - Daily Telegraph
In a tone of some amazement, one newspaper said these details „even included the tax paid on the purchase“, referring to stamp duty.
Mr Zanias has also instructed tax inspectors to examine the accounts of Greece’s 1,500 biggest tax debtors, “medium-level debtors” and 23,500 taxpayers in Greece who receive interest on deposits abroad.
Bankers have said that Greeks have withdrawn money at record rates in the past week, amid fears that it may be forced to leave the euro. Anecdotal reporting suggests about a 20 percent of those withdrawals have been remitted overseas.
In the event of “serious evidence of discrepancy between declared taxable income and accumulated assets”, Mr Zanias said tax officials were instructed to contact their EU counterparts to aid collection, according to reports in the Greek press.
The finance ministry has granted late tax payers until June 29 to reach a settlement with tax authorities.
Reducing the estimated €15bn (£13.2bn) that Greeks avoid paying in tax every year is a key condition tied to country’s two bailouts, worth a combined €240 billion.
But collection rates have not increased, while continued recession has reduced revenues and threatened the government's ability to meet its salary and pension bills. The government and bureaucracy has been virtually paralysed for six weeks since a May 6 election, which will be re-run on Sunday after an inconclusive result.
Mr Zanias has ordered senior tax officials to be ready to report on the progress of the renewed collection effort on July 5 to whoever the new finance minister is.
He is however a technocratic caretaker who will step aside soon. Officials in Brussels and Berlin will want results from his successor. Previous pledges to crack down on tax evasion have not been met.
Forex: USD/JPY finds bids at 78.80 - FXStreet.com
ECB ready to rescue struggling banks and hints at rate cut - Daily Telegraph
European Council President Herman Van Rompuy convened a conference call on Friday afternoon with the leaders of Germany, France, Italy and Britain, officially to discuss preparations for the G20 summit, expected to be dominated by the eurozone debt crisis.
Depending on the depth of any turmoil, an emergency meeting of ministers from the Group of Seven developed nations could be held on Monday or Tuesday during the summit in Los Cabos, Mexico, sources said.
The focal point for all is Sunday's repeat general election in Greece, a knife-edge race that could be won by parties vowing to tear up the harsh economic terms that the European Union and International Monetary Fund imposed as conditions of a bailout for the near-bankrupt state.
Such an outcome could drive Greece into default and possibly out of the eurozone, a prospect that could undermine faith in the currency bloc and add to pressure on the finances of bigger economies such as Italy and Spain.
Madrid's borrowing costs rose above 7pc on Thursday, a level that is widely considered unsustainable. They fell slightly on Friday and European shares and the euro gained on expectations of global central bank response.
"At best, we are going to have a situation that is extremely serious on Monday," Swedish Finance Minister Anders Borg told journalists. "In all likelihood, whatever the outcome, we are going to have a government which is going to find it hard to live up to the agreements they [the Greeks] have signed up to."
In a sign of growing strain between Europe's central powers, German Chancellor Angela Merkel hit out at France on Friday in response to President Francois Hollande's proposals for joint eurozone bonds and a joint bank deposit guarantee scheme.
"Europe must discuss the growing differences in economic strength between France and Germany," Mrs Merkel told German entrepreneurs, two days before the decisive second round of a French parliamentary election.
Responding to Mr Hollande's call for more eurozone solidarity, she said Germany had wanted to give the European Court of Justice the power to reject national budgets that breach EU rules but others had objected. She meant France.
Mr Draghi said the ECB was ready to provide money to solvent banks if they needed it, a clear plan to avoid the kind of credit crunch that occurred during the Lehman Brothers crisis in 2008.
"The ECB has the crucial role of providing liquidity to sound bank counterparties in return for adequate collateral. This is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term - and this is what we will continue to do," he said.
Mr Draghi also said that no eurozone country faces an inflation risk, which is the bank's main concern. That gelled with comments from ECB policymakers a day earlier that the central bank might be open to cutting interest rates.
Britain did not wait for the Greek vote to announce action. Bank of England Governor Mervyn King said on Thursday the country would launch a scheme to provide cheap long-term funding to banks to encourage them to lend to businesses and consumers.
The central bank would also activate an emergency liquidity supply, Mr King said in his annual Mansion House policy speech to London financiers.
Mr King said the eurozone's problems were causing a crisis of confidence in Britain that was leading to a self-reinforcing weaker picture of growth.
"The black cloud has dampened animal spirits so that businesses and households are battening down the hatches to prepare for the storms ahead," he said.
On Friday, the bank said it will hold a first emergency liquidity operation for banks next week with at least £5bn on offer. Loans would be at a minimum of the Bank Rate, 0.5pc, plus an additional 25 basis points.
In Athens, the election was seen as too close to call.
Alexis Tsipras, leader of the main anti-bailout leftist party Syriza, said on Thursday the deal with Greece's international lenders, which has helped push the economy into a depression, would not last beyond the weekend.
"The memorandum of bankruptcy will belong to the past on Monday," Mr Tsipras, who has rapidly emerged from fringe politics to challenge the mainstream for power, told his last campaign rally in Athens.
European leaders, however, have warned that Greece will get no help if it reneges. Officials have also hinted that Athens might be granted more time to achieve its fiscal targets if a new government sticks to the core reforms in the programme.
French President Francois Hollande warned Greek voters about seeking what Mr Tsipras has promised - a future in the euro while ditching the €130bn bailout deal sealed earlier this year and its demands for punishing austerity policies.
Mr Hollande said on Greek TV that he wanted the country to stay in the euro, rather than reviving its drachma currency.
"But I have to warn them, because I am a friend of Greece, that if the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the eurozone which will prefer to finish with the presence of Greece in the eurozone."
Syriza is running neck-and-neck with the mainstream conservatives for Sunday's parliamentary vote, a re-run of an election last month that produced a stalemate in which neither the pro- nor anti-bailout camps was able to form a coalition.
Greek banking stocks soared more than 20pc on Thursday amid market talk that secret opinion polls were showing that a government favourable to the international bailout agreement was likely to emerge after the June 17 election.
WORLD FOREX: Eerie Calm Before Greek Elections; Sterling Stumbles - NASDAQ
-- Norwegian krone, Swedish krona and Japanese yen make last-minute safe-haven surge before Greek election weekend
-- Euro holds steady in nervous trading ahead of Greek elections
-- Sterling briefly dives as BOE launches fresh crisis-fighting liquidity measures
By Alexandra Fletcher
Sterling stole the show in early European trade in an otherwise quiet session ahead of the Greek elections, diving against other major currencies as the Bank of England announced a new liquidity facility to help shield the U.K. from euro-crisis fallout, fanning suspicions the central bank is preparing for a rate cut.
The pound shed some 0.3% against the dollar, trading to a low $1.5477 and the euro surged to the day's high of GBP0.8152 as London traders digested the news that the Bank of England will launch its first auction as part of a series of emergency liquidity measures that will offer six-month loans to U.K. banks in exchange for a wide range of collateral.
The announcement of the initiative has prompted expectations that the Bank of England might extend its asset purchasing program, or quantitative easing, at next month's monetary policy meeting, with Barclays--a prominent U.K. bank--shifting its view so that it now expects a boost to so-called QE at the central bank's July meeting.
Further fuelling sterling sellers, the BOE also signaled deepening gloom over the U.K. economy, and concern over euro- crisis fallout. In addition to the liquidity boost, it also kickstarted a new program to encourage banks' lending to businesses.
"The alarm [over the deepening of the euro-zone crisis] in official circles was evident in the new initiatives on bank support... It remains to be seen how effective these two measures will be, and in the meantime we believe there is a strong argument for augmenting them with more QE," said Simon Hayes, an economist at Barclays in London.
However, alarm bells didn't ring for long and sterling rebounded to levels seen overnight during Asian hours.
Elsewhere, the euro was trading steadily, holding onto some small overnight gains against the dollar ahead of the Greek elections this Sunday, the result of which could determine whether Greece stays in the euro zone or not.
Some investors were seeking out safe havens for their cash in advance of the vote that is seen as a referendum on Greece's membership of the common currency. The hunt for safety sent the Norwegian krone to a three-month high against the euro and the Swedish krona to the day's high. The Japanese yen also benefited from safe-haven flows, charging to a one-week high against the dollar.
Looking ahead, after a bad run of U.S. data Thursday, the U.S. June Empire State manufacturing survey is due at 1230 GMT, along with U.S. May industrial production data at 1315 GMT.
At 1005 GMT, the euro was trading at $1.2619 against the dollar, compared with $1.2633 late Thursday in New York, according to trading system EBS. The dollar was at Y78.68 against the yen, compared with Y79.35, while the euro was at Y99.29, compared with Y100.26. Meanwhile, the pound was trading at $1.5548 against the dollar, compared with $1.5563 late Thursday in New York. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 81.786 from about 81.810.
-By Alexandra Fletcher, Dow Jones Newswires; +44 (0) 20 7842 9462, alexandra.fletcher@dowjones.com; @djfxtrader
(END) Dow Jones Newswires 06-15-120734ET Copyright (c) 2012 Dow Jones & Company, Inc.
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