Euro eases from 4-1/2-month high vs dollar

Euro fell on Wednesday on concerns a political crisis in debt-ridden Portugal could force the government to seek aid, though losses in the single currency should be limited amid expectations of rising euro zone interest rates.

 The euro eased from the 4-1/2-month high against the dollar set on Tuesday after failing to break through options barriers in the $1.4250 area. Analysts said the euro could dip below $1.40 in the short term, before rising toward $1.4280, the November high.

 Portugal's parliament was expected to reject austerity measures, setting the stage for the possible collapse of the minority Socialist government a day before a European summit. Portuguese bond yields rose as investors priced in increased risk of a debt restructuring.

 Portugal's Prime Minister Jose Socrates will make a statement at 2000 GMT, TSF radio reported on Wednesday, citing a government source.

 "There's currently a lot of concern on the Portuguese budget vote and the potential political implication for it," said Mary Nicola, currency strategist at BNP Paribas in New York. more

News - March 2011