Euro slides as Greek official says IMF repayment in doubt

The euro slid to a two-week low and a rally in European shares stalled on Wednesday after a Greek official said the country may not make an upcoming repayment to the International Monetary Fund.

The euro's fall follows remarks from a European Central Bank board member on Tuesday that the central bank could increase the pace of its bond-buying in May and June, bringing its losses against the dollar this week to more than 3 percent.

The pause in European shares mirrored the sticky performance of Asian bourses, although the Nikkei in Tokyo jumped to a 15-year high after Japan posted surprisingly strong economic growth for the first quarter.

European bank shares were in focus were in focus after Switzerland's UBS (UBSG.VX) paid $545 million to settle with U.S. authorities over currency rigging. Four other global banks are expected to settle later on Wednesday. Ahead of minutes from the U.S. Federal Reserve's Open Market Committee due later on Wednesday, the focus for investors will likely be on Greece and the euro's steep fall this week.

"A deal for Greece would remove a big risk factor from the euro and be euro-positive. Failure, on the other hand, could be disastrous," said Marshall Gittler, head of global FX strategy at IronFX.

The euro fell as low as $1.1065 EUR= early on Wednesday, off almost three cents since ECB Executive Board member Benoit Coeure said this week that the bank may "moderately" increase its bond-buying program in May and June.

It was last down 0.4 percent on the day at $1.1100. The Greek government's parliamentary speaker said on Wednesday that Athens will not make a payment to the IMF that falls due on June 5 unless it has reached a deal with its creditors by then. 

The dollar was broadly stronger on Wednesday following punchy U.S. housing data on Tuesday, rising to a two-month high against the yen above 121.00 yen JPY=.