FOREX-Euro firm as c.banks gear to counter Greek fallout - Reuters
* Cenbanks' liquidity pledge triggers short-covering
* Soft US data keeps hopes of Fed easing alive
* Yen gains after BOJ stands pat
By Anirban Nag
LONDON, June 15 (Reuters) - The euro hovered below three-week highs against the U.S. dollar on Friday, as investors trimmed bearish bets 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 dollar index fell to a three-week low of 81.703 against a basket of currencies. The euro was steady on the day at $1.2630, not far from Monday's three-week high of $1.2672, struck after a 100 billion euro aid package for Spanish banks was agreed at the weekend.
Much of how the euro will trade in the near term will be dependent 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, G-10 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 have 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 agree that the euro has scope to post short term gains if Greece's pro-bailout parties manage to win a majority in Sunday's election.
"Such an outcome would initially support the euro, but markets will quickly realize that Greece is still mired in a deep recession and may well need to renegotiate the terms of its bailout, in our view," Morgan Stanley said in a note.
"Under this scenario we would look to fade any euro/dollar rallies."
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 steadily 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. Bank of Japan Governor Masaaki Shirakawa chimed in saying central banks can offer liquidity to calm markets in case the weekend Greek elections heighten tension.
All these comments supported risk appetite and weighed on safe-haven currencies like the dollar and the yen.
Against the yen, the dollar fell 0.6 percent to one-week low of 78.90 yen after the Bank of Japan announced no policy change, though that is in line with market expectations. A further dollar drop towards 78 yen is likely to raise caution over Japan's intervention.
FDA urges markets to pull shellfish from SKorea - eTaiwan News
The decision follows an FDA evaluation that determined that the Korean Shellfish Sanitation program no longer meets adequate sanitation controls. The federal agency is in discussions with South Korean authorities to resolve the issue.
The sanitation program's deficiencies caused the FDA to remove five South Korean firms that shuck and pack shellfish from the Interstate Certified Shellfish Shippers List on May 1. The warning covers all fresh, frozen canned or processed mollusks from South Korea. Some contaminated fish may have entered the U.S. before May 1. International shippers on the list are included under the terms of the shellfish sanitation agreements between the FDA and the countries of origin.
An FDA spokesman, Curtis Allen, said Thursday the decision to call for the removal of the mollusks from the market was precautionary and began with an investigation into norovirus outbreaks in November and December.
"We want to ensure that all foods coming into the United States are safe for consumption," Allen said Thursday.
Curtis said no illnesses from eating the shellfish have been reported this year. Four norovirus illnesses, including three in Washington state, were reported in 2011. Norovirus causes vomiting or diarrhea.
In a statement released Thursday the FDA said that no other shellfish shippers on the certified list were affected. Mollusks harvested in non-Korean waters are not affected either.
Concerned consumers are being advised to check the package label for country of origin or to contact the store where the shellfish was purchased or the manufacturer. The FDA recommends consumers dispose of mulluscan shellfish from Korea or any products made from them.
Aides stop former RSS chief from speaking to media - Times of India
PUNE: Former Rashtriya Swayamsevak Sangh (RSS) chief K S Sudarshan was stopped from interacting with the media by his own men at a function held at Balgandharv Rangmandir on Thursday.
Sudarshan, who was in the city to attend a felicitation programme, was seated in the audience and not among dignitaries on the stage. When some media persons requested him to speak, Sudarshan readily agreed. However, his aides sitting nearby immediately surrounded him. They said that Sudarshan does not speak to the media without prior permission. Sudarshan looked puzzled by the reaction of his own men. "Why will I not speak? I am going to speak to them," he said. However, his aides did not relent and told the media persons to go away. "You need to understand the RSS system. Don't insist and go away. I know you are going to ask him about RSS," one of his associates said. Sudarshan remained a mute spectator as the journalists left the scene.
Sudarshan's early years as the sarsanghachalak were tumultuous with the BJP in power at the Centre. The Sangh Parivar came under attack for the post-Godhra riots in Gujarat and the Jinnah controversy triggered by Advani during a trip to Pakistan. Sudarshan, who retired in 2009 citing health reasons, made headlines for making controversial statements. In 2010, the Sangh had to express regret over one such statement he made against Congress president Sonia Gandhi. The Sangh had then clarified that Sudarshan's views on the Congress president do not represent the views of the organisation.
Sudarshan has kept a low profile since then and is guarded from making any statements, said an RSS worker present at the functioN.
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