By Shiyin Chen and Nikolaj Gammeltoft, Bloomberg
The euro slid from a one-week high against the dollar on concern Greek Prime Minister George Papandreou will fail to pass austerity measures even after winning a confidence vote in parliament. Asian stocks rose for a second day, while oil declined.
Europeâ€™s shared currency weakened 0.3 percent to $1.4372 as of 9:38 a.m. in Tokyo after appreciating to $1.4434, the strongest level since June 15. The MSCI Asia Pacific Index climbed 0.6 percent, extending yesterdayâ€™s 1.4 percent rally. S&P 500 futures expiring in September added less than 0.1 percent, following a 1.3 percent jump in the U.S. stocks gauge yesterday. Oil decreased 0.4 percent in New York.
While Papandreou won a vote of confidence from 155 out of 300 lawmakers, he needs parliamentary approval next week for a 78 billion-euro ($112 billion) package of budget cuts to stave off default. European finance ministers said this week that they would hold off a 12 billion-euro payment promised for July until plans to cut the deficit, sell state assets and impose a levy on wages is passed.
â€œThis vote buys Papandreou a week,â€ said Daniel Genter, who oversees about $3.8 billion as president of Los Angeles- based RNC Genter Capital Management. â€œBut theyâ€™ve got to pass an austerity package within the next 30 days. Thereâ€™s just not enough confidence right now that theyâ€™re going to get it through.â€
The euro declined against 14 of its 16 most-actively traded counterparts and slipped 0.2 percent to 115.37 yen. After the vote, police used tear gas to disperse crowds protesting Papandreouâ€™s budget cuts. The premier will now meet his counterparts at a summit in Brussels starting tomorrow that will discuss a new financing package to shield Greece from record borrowing costs for as many as three years.
â€œThe prime minister survived and thatâ€™s a good sign because you have a functioning government, but they still need to pass legislation for the austerity measures,â€ said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. â€œThe euro had priced in a lot of the good news and so itâ€™s come off a bit and will likely fall a little further.â€
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