Euro falls on more Greece debt fears

The euro has weakened due to concerns about high debt levels in Greece

The euro has fallen sharply against the dollar and the pound after reports that Greece had tried to renegotiate the terms of a eurozone rescue plan.

The euro was down by more than a cent, or 1%, against the dollar, at $1.3376. Against the pound, it fell by half a penny to 87.820 pence.

The risk premium on Greek bonds also increased sharply.

Greece moved quickly to deny the reports it had tried to change the terms of the bail-out plan.

"There was never any action by our country to change the terms of the recent agreement," said Greek Finance Minister George Papaconstantinou in a written statement designed to calm investors' fears.

The closely-watched gap between the yield on Greek government debt and German government debt widened after the reports.

The so-called "spread" between the two is a measure of how warily investors view Greek debt compared with German debt.

Rescue deal

Last month, European leaders agreed to provide 22bn euros, should Greece run into difficulties in borrowing money to service its high debt levels.

The agreement ended weeks of speculation about whether Europe would come to Greece's rescue. Greece itself did not ask for direct financial help.

The euro fell during the weeks before the European agreement, but had rallied since.

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