NZ dollar may drop on EU summit fears

The New Zealand dollar may fall from near a seven-week high as concern mounts that Thursday's European leaders' summit in Brussels will fail to deliver a durable solution to the region's debt crisis.

The New Zealand dollar was little changed on 78.67 US cents just before 8am from 78.76 yesterday at 5pm. The trade weighted index was little changed at 71.60.

Equities dropped on both sides of the Atlantic with the Standard & Poor's 500 Index falling 1.5 per cent to 1315.65, while Germany's DAX 30 slipped 2.1 per cent to 6132.29 after Chancellor Angela Merkel reiterated Germany's hardline stance, labeling Eurobonds and other joint-liability measures "economically wrong, and counterproductive".

Merkel is under pressure to do more to stem the crisis as leaders prepare to meet at the 20th summit since the Greece's financial meltdown rattled the euro.

"The kiwi should go down today - risk is coming off," said Alex Sinton, senior dealer at ANZ New Zealand.

"Early fears of a disappointing European summit are driving a grinding risk off move in what should otherwise be considered a stable market."

The two-day summit won't be attended by Greek Prime Minister Antonis Samaras who is in hospital recovering from an eye operation.

EU leaders were due to grill him on his coalition's plan to renegotiate the terms of a 130 billion-euro rescue package. Samaras operation has pushed back the International Monetary Fund and European Central Bank's visit to Greece that was meant to have started today.

New Zealand's international visitor arrivals are set for release by Statistics New Zealand this morning.

The New Zealand dollar increased to 62.91 euro cents from 62.80 cents and rose to 78.64 Australian cents from 78.49 cents. The kiwi was little changed on 50.52 British pence from 50.53. It fell to 62.72 yen from 63.24 yen.