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FOREX-Euro tumbles as investors fear bank exposures to Turkey
Published at 10/08/2018 at 14:45

* Turkish lira plunges, sparks broad risk aversion

* Euro affected by fears of bank exposures to Turkey

* British pound drops on concern of "hard" Brexit

(Updates prices, market activity and comments to U.S. market open, new byline, changes dateline, previous LONDON)

By Karen Brettell

NEW YORK, Aug 10 (Reuters) - The euro sank to its lowest against the greenback in more than a year on Friday after a report that the European Central Bank (ECB) was growing concerned about the exposure of banks to a dramatic slide in the Turkish lira.

Turkey's lira plunged as much as 14 percent on Friday as worries about President Tayyip Erdogan's influence over monetary policy and worsening U.S. relations snowballed into a market panic that also hit shares of European banks.

The Financial Times reported on Friday that the ECB had concerns about banks in Spain, Italy and France and their exposure to Turkey's woes.

“You’ve had a fairly sharp move lower in the euro and it’s broken through key technical levels as well,” said Richard Franulovich, head of FX strategy at Westpac Banking Corp in New York.

The euro dropped below technical support at $1.15 to $1.1421, down 0.91 percent on the day and the lowest since July 2017. Against the yen, the euro slid 1 percent to 126.79 yen, a two-month low.

The lira added to losses after U.S. President Donald Trump said he had authorized higher tariffs on steel and aluminum imports from Turkey.

Erdogan earlier told Turks to exchange gold and hard currency into lira, framing the crisis as a "national battle" against economic enemies.

“He spoke today sounding very combative and defiant instead of possibly offering a bit of fig leaf to the U.S.,” said Franulovich.

The flight from risky assets heaped pressure on commodity-linked currencies including the Australian dollar, which fell 1 percent to $0.7280, an 18-month low.

"Risk aversion is taking control again, putting pressure on emerging market currencies while letting the safe haven dollar and the Swiss franc appreciate," said Antje Praefcke, a currency strategist at Commerzbank in Frankfurt.

The dollar index edged only slightly higher after data on Friday showed that core consumer prices rose 0.2 percent in July, in line with economists’ expectations and the same gain as in May and June.

The British pound dropped to its lowest levels in over a year on concerns about a "hard" Brexit.

========================================================

Currency bid prices at 9:17AM (1317 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.1421 $1.1526 -0.91% -4.79% +1.1536 +1.1418

Dollar/Yen JPY= 111.1000 111.0700 +0.03% -1.39% +111.1600 +110.6100

Euro/Yen EURJPY= 126.91 128.03 -0.87% -6.12% +128.1100 +126.8000

Dollar/Swiss CHF= 0.9944 0.9932 +0.12% +2.06% +0.9975 +0.9932

Sterling/Dollar GBP= 1.2742 1.2822 -0.62% -5.70% +1.2836 +1.2740

Dollar/Canadian CAD= 1.3088 1.3048 +0.31% +4.06% +1.3122 +1.3043

Australian/Doll AUD= 0.7298 0.7370 -0.98% -6.45% +0.7380 +0.7282

ar

Euro/Swiss EURCHF= 1.1359 1.1452 -0.81% -2.82% +1.1461 +1.1358

Euro/Sterling EURGBP= 0.8961 0.8987 -0.29% +0.88% +0.8991 +0.8936

NZ NZD= 0.6596 0.6612 -0.24% -6.92% +0.6621 +0.6572

Dollar/Dollar

Dollar/Norway NOK= 8.3519 8.3177 +0.41% +1.77% +8.3785 +8.3084

Euro/Norway EURNOK= 9.5404 9.5879 -0.50% -3.13% +9.5940 +9.5281

Dollar/Sweden SEK= 9.1342 9.0068 +0.50% +11.37% +9.1409 +8.9998

Euro/Sweden EURSEK= 10.4340 10.3822 +0.50% +6.05% +10.4615 +10.3580

(Additional reporting by Tom Finn in London)

((Karen.Brettell@thomsonreuters.com; +1 646 223 6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net))