Euro falls on fears over debt of Greece, dollar advances

NEW YORK (Reuters) - The euro fell across the board on Tuesday after reports that suggest that Greece intends to introduce amendments to an agreement of financial support from the European Union, which revived fears about the deficit problems in Athens.

Media reports said that Greece wanted to amend the agreement last month to avoid the contribution of the International Monetary Fund, and that Greek banks were seeing hard hit by the crisis, and that large depositors were transferring their money abroad.

A wave of euro selling pushed the dollar, which has also been supported by recent strong economic data from the U.S. and the growing expectations the Federal Reserve might tighten monetary policy sooner rather than later.

"The situation in Greece is a burden on the euro. The fact that the differential (Greek debt) (...) have been expanded by the news, raising questions about the ability of Athens to refinance" their liabilities, said Fergal Smith, Canadian market strategist at Action Economics in Toronto.

Although Greece denied that it intends to amend the agreement between the EU and the IMF, his denial failed to allay concerns of investors, which led to the spread between Greek 10-year bond and Germany's benchmark to a new high in the history of the euro area, by about 400 basis points.

However, the dollar fell from its advance against the euro after the release of the minutes of the last monthly meeting of the Federal Reserve suggested that interest rates in the United States would remain low for quite some time.

On the evening of New York, the euro fell 0.6 percent to $ 1.3402 after touching $ 1.3357, its lowest level in more than a week, according to Reuters data. The euro also fell 1.2 percent against the yen at 125.66 points.

"The downward trend of the euro remains intact, based on the deterioration of the achievement gap and uncertainty about the fiscal situation of Greece," said Ashraf Laidi, market strategist at CMC Markets in London.

The Australian dollar rose to $ 0.9288, its highest level since January, after Australia's central bank raised its interest rate by 25 basis points to 4.25 percent.

This helped boost the Canadian dollar, which broke the parity level against the U.S. dollar for the first time since July 2008, climbing to 0.9999 units.

(Additional reporting by Naomi Tajitsu in London)