Euro May Be Hurt by Bank ‘Exposure’ to East Europe, Merrill Says

By Justin Carrigan

Feb. 16 (Bloomberg) -- The rising cost of insuring against default by a “peripheral” European government is likely to weigh on the euro, according to Merrill Lynch & Co.

“This remains an important background negative for the euro,” Steven Pearson, a strategist in London at Merrill Lynch, wrote in a note today. “European banking-sector exposure to Eastern Europe, often via foreign currency lending, is an additional euro negative story that is gaining air-time.”

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net