Dollar rises as Greece anxieties sting the euro

NEW YORK (Reuters) - The dollar rose broadly on Monday, with the euro sliding more than half a percent against the U.S currency, on growing concern that Greece may default on debts.

The euro was last off 0.70 percent against the dollar at $1.0730, weighed down by the European Central Bank's bond-buying program and the risk Greece could leave the single currency within months.

Athens is in negotiations with its euro zone partners and the International Monetary Fund over reforms required to unlock remaining bailout funds. Public sector entities in Greece were ordered to transfer idle reserves to the central bank to help with a cash squeeze.

The European Central Bank's vice president, Vitor Constancio, said on Monday that Greece would not necessarily have to leave the euro if it defaults on its debt. Still, ECB officials are concerned about the country's looming 1 billion-euro bill due to the IMF in May.

The dollar also gained against the Japanese yen and the British pound, rising 0.30 percent against each.

The Australian dollar fell against the U.S. dollar after the country's top central banker said the currency, which has lost 12 percent in the last six months, is likely to fall further.

The U.S. dollar index was last up 0.50 percent. The dollar slumped last week, continuing a run of weakness after a year-long rally.

"Since the dollar was on the back foot, you may be seeing a repositioning where some investors have decided that at these new levels it may make sense to be long the U.S. dollar," said Charles St-Arnaud, senior economist and strategist at Nomura Securities.

The Australian dollar last traded at $0.7715, off 0.70 percent. Reserve Bank of Australia Governor Glenn Stevens said he expects the Australian dollar to fall further.

"I'd be a bit surprised actually if it doesn’t go down some more," Stevens said in New York, during a question-and-answer session following a speech before the American Australian Association.

The Australian and New Zealand dollars had earlier gained after China moved to boost banks' lending power in Asia’s biggest market. The Aussie hit $0.7844, near a one-month high, after the China move.

The People's Bank of China on Sunday cut the amount of cash that banks must hold as reserves in a move to increase lending and combat slowing growth.