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Reuters
UPDATE - Dlr surges on rumor, denied, of bin Laden capture
Friday March 19, 12:03 pm ET
(Updates with traders' comments on bin Laden capture rumor)
NEW YORK, March 19 (Reuters) - The dollar surged on Friday against the euro and the safe-haven Swiss franc on stop-loss selling in European currencies in a volatile market sensitive to geopolitical developments, traders said.
One reason traders cited for the flurry of aggressive dollar buying was a rumor, since denied by the Pentagon and a Pakistani security official, that al Qaeda leader Osama bin Laden had been caught in fighting in Pakistan.
"I think ... we have a rumor going around the trading floor about bin Laden. I don't know what the rumor is," and it was not confirmed, said Larry Brickman, currency strategist with Banc of America Securities (News - Websites) in New York.
Should the capture of a leading al Qaeda figure occur, that would likely prove positive for the dollar, traders said.
The dollar climbed swiftly more than 1 percent against the Swiss franc (CHF) to session highs above 1.2740 francs.
The euro (EUR=) slipped to session lows around $1.2259 and down about 1 percent from around $1.2335 in a burst of stop-loss order selling.
"We had euro stops wiped out below $1.2320," said John McCarthy, director for foreign exchange at ING Capital Markets.
Earlier on Friday a bomb threat to Washington DC schools briefly boosted the euro against the dollar. Traders were also on alert for any indication of a resolution to the standoff in Pakistan, reportedly involving a senior al Qaeda figure.
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