FOREX-Euro cuts gains as debt worries return, Fed awaited - Reuters
* Euro falls to session low vs dollar
* Australian dollar rises to 6-week high vs dollar
* G20 draft communique urges bold action from Europe
By Anirban Nag
LONDON, June 19 (Reuters) - The euro fell against the dollar on Tuesday after a German court said the government had not consulted parliament sufficiently about the configuration of Europe's permanent bailout scheme, unnerving investors already wary of the common currency.
Analysts said the ruling may crimp broad powers of the bailout fund, the European Stability Mechanism, and could lead to delays in rescuing countries struggling with surging borrowing costs and mounting problems in the banking sector.
"The market has taken this negatively," said Gavin Friend, currency strategist at National Australia Bank, referring to the comments from the German court.
"We would like more details but the market wants to shoot first and ask questions later. This could curtail the ESM's powers and comes during nervous times when the impasse between the German view and that of the peripherals and the world is growing."
The euro reversed modest gains to fall to a session low of $1.2568 on trading platform EBS. It was last trading flat at $1.2580, having retreated from a one-month high of $1.2748 on Monday in its worst daily showing in nearly three weeks.
It hit the peak after parties supporting Greece's international bailout gained enough votes at the weekend to form a ruling coalition in Athens.
The euro has support levels at $1.2536, the trendline drawn below daily lows from June 1, and the 21-day moving average at $1.2530. Traders said news that a second audit of Spanish banks would be delayed until September also weighed on sentiment.
Earlier the euro was supported by expectations that the U.S. Federal Reserve would ease monetary policy, a move that would lift demand for riskier assets and drive the greenback lower.
Another round of monetary stimulus would weigh on the U.S. dollar and boost growth-linked currencies like the Australian dollar, traders said. The Federal Reserve's rate-setting committee starts its meeting on Tuesday.
But overall sentiment towards the common currency was cautious as Spanish borrowing costs hovered near euro-era highs and risk of contagion engulfing Italy remained high.
"The market is still worried about the euro and there are problems in the euro zone. But the Fed is coming up and I think the dollar could see a leg down and risk will be bid," said John
Hardy, FX strategist at Saxo Bank.
"The euro is still a sell on rallies."
The dollar index which measures the greenback against a basket of major currencies was flat at 81.925, having struck a one-month low of 81.266 on Monday.
The Fed is expected to extend its long-term bond-buying through Operation Twist by a few months from the current deadline of June after a series of disappointing data.
A few are expecting it to opt for a third round of quantitative easing as Europe's troubles pose a risk to growth in the world's largest economy.
Against this backdrop, the world's major economies, or G-20, were set to urge Europe to take "all necessary policy measures" to resolve its woes and U.S. President Barack Obama requested a meeting with its leaders.
GERMANY AND SPAIN IN FOCUS
Spain, the euro zone's fourth-largest economy and more than twice the size of bailed-out euro zone partners Greece, Portugal and Ireland combined, is at the centre of a market storm as it struggles with a deep recession and bank sector restructuring.
Spain's Treasury sold off 12- and 18-month debt on Tuesday at yields of 5.974 percent and 5.107 percent respectively, up from 2.985 percent and 3.302 percent previously. The country will also sell between 1 billion and 2 billion euros of bonds due in 2014, 2015 and 2017 on Thursday.
The ructions in the euro zone periphery are likely to be reflected in a key German sentiment survey. The ZEW investor sentiment is expected to drop sharply to 4.0 from 10.8, pointing to a further slowdown in Europe's largest economy.
Against the yen the euro fell to 99.28 yen. The dollar edged lower against the yen, easing 0.3 percent to 78.86 yen and a drop below 78.61 yen will take it to its lowest in two weeks.
The dollar's move lower came as interest rate differentials moved against it on expectations of more Fed easing. Those expectations saw the growth-related Australian dollar jump to a six-week high of $1.0147.
Luka Magnotta to appear in Montreal court today - CBC
Luka Rocco Magnotta is expected to be appear in a Montreal courtroom today to face a number of charges, including first-degree murder, in the death and dismemberment of Chinese student Jun Lin.
Magnotta, 29, was flown from Germany to Quebec's Mirabel airport aboard a military plane on Monday evening, in a highly controlled and secretive extradition operation orchestrated to minimize media attention on his return.
Magnotta was taken to a police operational centre in the north end of Montreal where he is to be held until his court appearance Tuesday, when he is expected to be formally charged.
Magnotta is suspected of killing and dismembering Lin, a 33-year-old Chinese citizen and permanent resident in Canada who was attending Concordia University.
Last month, Lin's torso was found in a suitcase outside an apartment in Montreal, the same day his hand and foot were mailed to the Ottawa offices of the federal Conservative and Liberal parties. His other hand and foot were discovered by staff opening packages at two separate schools in Vancouver several days later.
Jun Lin, a Chinese citizen and permanent resident of Canada, was studying at Montreal's Concordia University. (Facebook)Magnotta is facing a number of charges including first-degree murder, committing an indignity to a human body, posting obscene material, mailing obscene material and criminally harassing Stephen Harper and other members of Parliament.
On Monday evening, Montreal police Cmdr. Ian Lafrenière said investigators can now begin a formal interrogation of Magnotta, noting that Lin's head has yet to be found.
"We'll do everything to find it," he said.
Widespread media coverage
Lin's family arrived in Canada earlier this month and posted an open letter saying the 33-year-old was their "pride and joy." They also expressed gratitude for the outpouring of support and assistance they have received.
Police believe Lin was killed sometime around the evening of May 24 or early May 25. Video that allegedly captured some of the act was posted to an online gore site on May 25 and circulated on the web for several days.
The discovery of Lin's remains prompted an international manhunt for Magnotta, who fled first to France and later to Germany. He was arrested in a Berlin cybercafé on June 4.
The brutal details of Lin's death have drawn widespread media coverage both here in Canada and abroad. Lafrenière said the massive amount of public attention garnered by the case necessitated the secretive operation to get Magnotta back into Canada.
And a Montreal defence lawyer says that will make it difficult for Magnotta to receive a fair trial.
"The trial judge will have to make sure with each and every juror that there's no bias," Jeffrey Boro said.
Two high-profile Crown prosecutors, Hélène Di Salvo and Louis Bouthillier, have been assigned to the case.
Bloc Party announce eight UK tour dates for October - BBC News
Bloc Party have announced an eight-date UK tour starting in Newcastle on Friday 12 October.
The band, who release new album Four in August, will also play gigs in Leeds, Glasgow, Birmingham, Southampton, Bristol and Manchester.
They finish the tour just over a week later in Cambridge on 20 October.
The band is also playing several dates in America this August as well as a number of festivals across Europe including Ibiza Rocks in September.
Bloc Party - Kele Okereke, Russell Lissack, Gordon Moakes and Matt Tong - took a break between 2009 and last year.
The band pursued their own musical projects with 30-year-old Okereke releasing his first solo album, The Boxer, in 2010.
Bloc Party released their last studio album, Intimacy, in 2008.
The group's 2005 debut Silent Alarm won the Mercury Music Prize.
G-Mac wants Claret Jug but Simpson may skip Open - ESPN.co.uk
Graeme McDowell is hoping to bounce back from his US Open disappointment by winning the Open Championship at Royal Lytham & St Annes next month.
McDowell, the 2010 US Open champion, fell narrowly short in his bid to win the title for the second time in three years at Olympic Club last weekend - coming up a shot shy as 26-year-old American Webb Simpson claimed his maiden major title.
While disappointed to miss out on victory having held a share of the lead going into the final round, McDowell has taken the positives from the performance and has now set his sights on winning the Claret Jug next month.
"I will probably take a week off now and go to Lytham and prepare," McDowell said. "I fancy a run at that Claret Jug, I do."
He added: "I will take away a large cheque and am probably very close to locking my Ryder Cup place, which is more important to me.
"It has reinforced to me that I can compete and win more major championships. It's been a frustrating five or six weeks for me, but I knew in my heart that my game was better than my results were showing and it was just great to come in this week, prepare, try my best and compete."
The story is different for Simpson, however, who may not tee it up in Blackpool at all. His wife is expecting their second child in August, and the North Carolina native hinted he will not risk being stranded overseas if there is any possibility she could go into labour prematurely.
"I don't know about Lytham," Simpson said. "We met with our doctor before this week, just to see if my wife, Dowd, could come. The next eight weeks are going to be up in the air. We're going to see what we can do.
"It will all be kind of game-time decision for us."
Simpson became the 15th different first-time major winner in a row, indicating the competitive nature of professional golf at the moment. He believes that is an indication of the greater quality of tournament fields, rather than an indictment of the lack of a bona fide dominant superstar - like Tiger Woods, for example - in the game.
"I think the game's changing. My caddie and I were talking this week, the 14-year-old kid [Andy Zhang] was here, Beau Hossler was playing so well. I couldn't imagine playing in even a qualifier for this tournament when I was in high school," he said.
"But I think the Tiger effect of inspiring people to play at a younger age, and I think the access to golf has gotten so much bigger that the game is changing. Even in college, I would have been scared to death to play in a US Open. And these guys are playing like they're trying to win the tournament.
"So I think the game will continue to evolve like that. I'm lucky because I feel like we're playing at a time where golf is at its best."
© ESPN EMEA Ltd
Hodgson unconcerned by expectation (From York Press) - The Press in York
Hodgson unconcerned by expectation
7:04am Tuesday 19th June 2012 in National Sport News © Press Association 2011
Roy Hodgson welcomes the growing anticipation of Euro 2012 success.
After leaving for Poland and Ukraine amid such low expectations, England's opening two performances have triggered far more optimism, although a point from their meeting with co-hosts Ukraine at the Donbass Arena on Tuesday night is still required for passage into the last eight.
Hodgson said he wants to embrace the hype, dismissing the idea of a fear factor taking hold. He said: "It's not just England who haven't always performed when the expectations were heightened. There's quite a few teams that have failed. It's a fact of life. We've come here with the England national team. We believe in ourselves and we want to do well."
"In some ways it's rather nice that people back home are hoping and even believing we can do well, and we're giving them something to dream about and cling onto," he added.
After confirming Theo Walcott had shrugged off his hamstring complaint, Hodgson appeared to be veering towards selecting the Arsenal winger.
It was Walcott's introduction that turned what looked like becoming a defeat to Sweden into a victory that leaves England heading into their final fixture level on points with France.
With the Group D winners now certain to meet Italy and avoid tournament favourites Spain, who face the runners-up, Walcott's additional pace may be utilised ahead of James Milner after he did so much running in Kiev.
"The technical staff have done such a good job helping the players recover," said Hodgson. "We've been very anxious to make sure we use the training sessions, and in particular, the recovery sessions wisely.
"I get the feeling at the moment that the players are as fit and ready for this third game as they were for the first. I don't necessarily feel the need to change people because I'm worried about their legs or their ability to see the game through.
"The team that's been doing so well is ready to go. On the other hand, there are plenty of people who are out of the team, as you saw with Walcott when he came on the other night, who are very anxious to make a statement as well."
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