LONDON, Sept 25: The euro was steady on Wednesday as the market digested both a proposal by the EU commission to push back a budget balancing deadline and the US central bank’s decision to keep benchmark interest rates on hold at a 40-year low.

Analysts said that in addition to the Fed move, the market was weighing the impact of an admission by the EU Commission that a deadline for the 12 euro-zone countries to balance their budgets by 2004 was no longer feasible.

If the status quo announced by the Fed had already been largely factored into the currency market in advance, the same could not be said for the EU Commission’s announcement, said Dresdner Kleinwoert Wasserstwin analyst Paul Mackel.

Essentially that could be seen as a slight euro positive in the sense that it makes the budget deficit targets not so rigid, Mackel said.

The single European currency slipped back to $0.9810 from 0.9813 late on Tuesday in New York.

The dollar eased to 122.65 yen from 123.29 on Tuesday.

Having initially spiked up on the back of German business confidence data released earlier in the day by Germany’s Ifo economics research institute, the euro fell back to stand little changed against other major currencies.

CIBC economist Audrey Childe-Freeman said although the survey’s headline index was not as weak as some had feared ahead of the data’s release, other sub-indices painted a grimmer picture of the state of German industry.

The figures weren’t particularly brilliant, Childe-freeman said.

The expectations index for next month fell again in September, which raised fears business conditions are set to worsen, she told AFP.

Ifo reported that its headline business climate index fell in September for the fourth month in a row to 88.2 from 88.8 in August.

That compared with expectations for a decline to 88.4, although rumours ahead of the release of the figures suggested an even weaker outcome was to be expected.

Meanwhile, Ifo said its September business expectations index fell to 99.3 from 100.7 in August.

The euro was changing hands at 0.9810 dollars against 0.9813 late on Tuesday in New York, 120.30 yen from 121.00, 0.6285 pounds (0.6294) and 1.4646 Swiss francs (1.4629).

The dollar was being quoted at 122.65 yen (123.29) and 1.4937 Swiss francs (1.4905).

The pound was at 1.5611 dollars (1.5584), 191.40 yen (192.08) and 2.3319 Swiss francs (2.3227).

On the London bullion market, the price of an ounce of gold eased back to $325.35 from 326.30 late on Tuesday.—AFP