Euro sinks on Greek concerns

LONDON (AFP) - The euro sank against the dollar on Thursday on stubborn worries over the Greek debt crisis after the nation warned again that it could appeal for aid to the International Monetary Fund.

In early morning trade, the European single currency tumbled to 1.3648 dollars. It later stood at 1.3673 dollars, down from 1.3735 late in New York on Wednesday.

"All this talk of a bail-out plan had been buoying the euro but the market now seems to realise that talking about a bail-out and delivering one are two totally different things," said CMC Markets analyst Michael Hewson.

"German constitution and EU law prohibit bail-outs and Greece's threat to go IMF merely highlights these problems more starkly.

He added: "The euro will continue to remain under pressure as any type of bail-out plan could be illegal under EU law."

Greek Prime Minister George Papandreou on Wednesday refused to rule out an appeal for aid to the IMF if European backing is insufficient to resolve its debt crisis.

"If we realise that we indeed will be borrowing at extremely high rates... there are other options," Papandreou told reporters in Brussels on Wednesday after talks with the head of the European Commission, which is supervising deficit reduction measures.

"Nothing is excluded," Papandreou said having been asked whether seeking recourse to the IMF remained a live threat, following earlier comments from a government spokesman in Athens to that effect.

"But we would certainly prefer a European solution," he said in a pointed remark days from a summit of European Union leaders.

Athens has pledged to implement deep spending cuts and tax increases worth about 16 billion euros this year as it labours to slash a budget deficit of 12.7 percent of output and debts of nearly 300 billion euros.

The EU and the European Central Bank have made clear that an approach to a body outside EU institutions would be unwelcome.