RTRS: Euro steady, Aussie gains after China reserve hike
* Euro steady; worries on Ireland, wider debt crisis weigh
* Aussie gains after China raises banks' reserve requirement
* Relief that China did not raise interest rates helps risk
(Updates prices, adds detail, quote)
By Jessica Mortimer
LONDON, Dec 10 (Reuters) - The euro held steady against the dollar on Friday while the Australian dollar staged a relief rally after China increased the reserve requirement for banks but kept interest rates on hold.
The Aussie -- which is most sensitive to monetary tightening in China given Australia's close trading links with the country -- dipped briefly after Beijing increased the reserve requirement by 50 basis points. [ID:nTOE6B907U]
But it soon pushed back up, taking the euro and other perceived higher risk currencies with it on relief that China had not opted to raise interest rates as well given another jump in Chinese exports last month. [ID:nL3E6NA0GA]
The euro underperformed, however, holding up against the dollar but falling against other currencies, including sterling EURGBP=D4 and the Swiss franc EURCHF= as concerns over the debt crisis in the euro zone continued to dampen sentiment.
"In recent weeks people have been talking about the possibility of a rate hike in China," said Niels Christensen, currency strategist at Nordea in Copenhagen.
"Given they only announced a reserve requirement hike we are seeing a bit of a relief rally as it has given a small boost to risk appetite. This has especially helped the Aussie and the New Zealand dollar."
The euro was steady at $1.3244 EUR=, staying above a low of $1.3164 on trading platform EBS on Thursday.
Sentiment towards the euro was shaky after Moody's said on Thursday it may downgrade the ratings of some Portuguese banks. [ID:nWNA6521] The announcement followed Fitch's earlier decision to slash Ireland's rating by three notches. [ID:nLDE6B81AH]
Technical analysts said the euro remained on a downward trend as intraday highs have been getting lower since Monday.
The next key target for the euro is seen at $1.3150, followed by its 200-day moving average around $1.3115. Traders said the euro may fall back to its December low of $1.2970 in the coming weeks.
Ireland's government will seek parliamentary approval for an 85-billion-euro IMF/EU rescue package next week, though there were concerns about political infighting as the opposition Labour Party pledged to vote against it. [ID:nLDE6B81XS]
