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Euro Steady Against Majors; Eurozone Trade Balance Turns To Surplus

The euro halted its Asian session's sharp sell-off in early European trading on Monday after a report showed that the eurozone trade balance swung to a surplus in February.

The trade surplus amounted to EUR 2.8 billion in February compared to revised EUR 7.9 billion deficit in January. Economists had expected a surplus of EUR 3 billion.

In February last year, the balance was in a deficit of EUR 2.8 billion.

Exports by the 17-nation euro-currency bloc rose 11 percent year-on-year in February, while imports grew 7 percent.

European shares are mixed in early trading, in contrast to its Asian peers that were mostly down on worries over global economic growth concerns.

Lingering concern about Chinese growth and fears about the debt-plagued euro zone fueled risk aversion in the morning after a surge in the nation's borrowing costs prompted Spain's deputy economy minister, Jaime Garcia-Legaz, to call on the European Central Bank to step up purchases of bonds.

Traders are also cautious ahead of Spain auctions bills and longer-dated securities on Tuesday and Thursday, respectively and the direction of yield will be closely watched.

The euro that fell below the key 1.30 mark against the dollar for the first time since mid-February in the morning, snapped back to above that level and stayed a tad above 1.3030 in its recent trading.

Against the Swiss franc, the common currency moved past the 1.2030 level and the pair was rather unchanged from the 1.2025/35 area. Last week, the pair touched near its 1.20 floor rate.

Swiss producer and import prices dropped for the eleventh consecutive month in March, data released by the Swiss Federal Statistical Office showed today.

The producer and import price index fell 2 percent year-on-year, after declining 1.9 percent in February. Economists had expected the index to drop 1.8 percent.

Month-on-month, the producer and import price index rose 0.3 percent in March, following a 0.8 percent gain in the previous month. Economists had forecast 0.5 percent monthly increase.

The single currency that slumped to a 19-month low of 0.8212 against the pound ahead of the European session recaptured almost 20-pips in so far in the session.

House prices in the U.K. rose to a new-record high in April, buoyed by London's strong performance amid lower supply, property website Rightmove said.

Average asking prices for a property in the U.K. rose 2.9 percent month-over-month to a new record-high of 243,737 pounds in April. This surpassed the previous record set nearly four years ago in May 2008.

Rebounding from its Asian session's 2-month low of 104.67 against the yen, the common currency rose as high as 105.36 before holding steady around 6:00 am ET.

Looking ahead, the US retail sales for March, empire manufacturing data for April, business inventories for February and the National Association of Homebuilders' housing market index for April are expected to garner market attention in the upcoming New York session.

by RTT Staff Writer

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