CORRECTED-FOREX-Euro defensive after mass ratings downgrades

Sun Jan 15, 2012 9:41pm GMT

(Corrects in 3rd par euro level to $1.2631 not $1.2731)
Jan 16 (Reuters) - Euro eased in early Asian trade on Monday and looked set to stay under pressure following the credit ratings downgrade of several euro zone countries, including France, late last week by Standard & Poor's.
Adding to the gloom, negotiations between Greece and private creditors on a debt swap deal broke down and markets are now worried the euro zone's bailout fund, ESFS, might lose its AAA rating with Standard and Poor's as well.
The euro stood at $1.2631, having touched a fresh 16-month trough against the dollar around $1.2624. This compared with $1.2674 late in New York on Friday. Against the yen, it reached an 11-year low near 97.10, before steadying at 97.29 yen.
The common currency also lost ground against the Australian dollar and was hovering just above an all-time low at A$1.2250 . Against the Swiss franc, it fell as low as 1.2041 francs, creeping ever closer to the SNB's floor of 1.2000.
"EURUSD has traded south ever since S&P's December 5 negative ratings watch announcement, and we suspect will remain subject to further downward pressure in the coming week," analysts at BNP Paribas said.
"This may have less to do with the fact that the EFSF is now threatened with the loss of its AAA status ... than worries over the fate of the Greek bond swap talks."
Pressure was mounting on Athens to complete a deal with private bondholders to cut its debt to more sustainable levels and convince its international lenders to keep giving it the cash it needs. Without aid, Athens would default in March when it has to redeem 14.5 billion in bonds. (Reporting by Ian Chua)