* Euro near 33-month low as growth stagnates in euro zone
* Market sees soft US data as driven by one-off factors
* Yen shows limited response to poor Japan GDP
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano
TOKYO, Feb 17 (Reuters) - The euro was on the back foot on
Monday, as concerns mounted about weakening economic growth in
Europe at a time financial markets and policymakers fret about a
new threat to the global economy from a fast spreading
coronavirus in China.
The euro, which hit a 33-month low of $1.0817 on Friday,
fetched $1.08385 EUR= in afternoon Asian trade on Monday, flat
so far on the day but down 2.3% since the start of month - the
worst performance among G10 currencies.
"Coronavirus is increasingly looking like a long-term issue
and thus, at least for currency markets, it will be playing
second fiddle," said Kyosuke Suzuki, manager of currencies at
Societe Generale.
"In contrast, sentiment on the euro is becoming clearer,
with weak economic fundamentals helping to push it down."
The German economy stagnated in the fourth quarter due to
weaker private consumption and state spending, data showed on
Friday, renewing fears of a recession at a time Chancellor
Angela Merkel's conservatives are preoccupied with a search for
a new leader.
Europe's biggest economy posted zero growth from the
previous quarter while separate data showed euro zone gross
domestic product grew 0.1% quarter-on-quarter in the fourth
quarter, in line with forecasts but the weakest since 2014.
There was even a chatter about the possibility of a rate cut
by the European Central Bank, with euro zone money market
instruments pricing in a small chance of rate cut in coming
months, though bond yields were so far little moved.
"I think the currency market is going a bit too far in
talking about easing possibilities," said Hideki Kishida, senior
economist at Nomura Securities.
"But people in the forex market are probably thinking that
if data for the period before the coronavirus was so weak, it
will get worse, and if China catches a cold, so will Germany."
Japan's economy was also under increasing strain, with GDP
figures released on Monday coming in far below economist'
forecasts, hitting Tokyo shares.
The world's third-largest economy shrank 1.6% in the three
months to December, the largest drop in six years, hit by sales
tax hike. Reaction in the currency market was muted as the safe-haven
yen tends to be supported on bad news. It stood at 109.80 yen
per dollar JPY= , little moved in a tight range for more than a
week.
"I am getting sick of looking at those .80 on my screen,"
said a trader at a U.S. bank, referring to the last two digits
of the dollar/yen rate.
Most market players expect growth in the United States to
remain stronger among the developed world, although data
published on Friday provided a mixed picture.
U.S. core retail sales was flat last month, lagging
expectations of 0.3% growth while its rise in December was
revised down to 0.2% from a previously reported 0.5%. Industrial production also shrank more than expected by
0.3%.
Still, economists have blamed one-off factors such as warm
weather and output suspensions stemming from troubles at Boeing
BA.N for the downbeat numbers.
The dollar index =USD stood at 99.131, near Friday's 4
1/2-month high of 99.241.
The Australian dollar edged up as investors assessed the
latest reading on coronavirus cases in China's Hubei Province,
the epicentre of the outbreak.
The province reported 1,933 new cases, up slightly from the
previous day after two days of falls, but the number of new
deaths dropped to 100 from 139. Nationwide, the total infections
topped 70,000. The Australian dollar ticked up 0.15% to $0.67155 AUD=D4 .
The currency, which is used as a proxy for risk on Chinese
assets because of Australia's high trade exposure to the Asian
giant, has partly been supported by expectations of stimulus
from Beijing.
The onshore yuan CNY=CFXS was also up, trading 0.17%
higher at 6.9760 per dollar by midday.