The euro was steady against the dollar yesterday despite a warning from ratings agency Standard and Poor’s which appeared to undercut the recent progress made on the Greek debt crisis.

Dealers said trade was quiet, with US markets closed for the Independence Day national holiday, meaning the impact of the S&P lead might only be seen today.

S&P said early yesterday that recent proposals for a new Greek bailout, under which private sector banks would rollover their exposure, would be tantamount to a debt default, the very outcome officials are trying to avoid.

A default is feared because of the potential domino effects in could have across the eurozone and the global financial system.

In late London deals, the European single currency was at $1.4524 after $1.4526 in New York Friday. The dollar fell to 80.77 yen from 80.82 yen. The S&P warning came after eurozone finance ministers cleared the way on Saturday for Greece to receive the next 12-billion-euro tranche of its May 2010 €110-billion EU-IMF bailout.

S&P said that ideas floated for a second bailout of similar size by the French Bank Federation risked putting Greece into default.

“It is our view that each of the two financing options described in the FBF proposal would likely amount to a default under our criteria,” S&P said. “Obviously the politicians have yet to agree with the rating agencies how a default rating can be avoided if the private sector is involved in the cost of a rescue package,” Commerzbank chief economist Joerg Kraemer said.

Eurozone finance ministers meet again on July 11 to thrash out the second Greek bailout but more work is now needed, with officials wanting to be sure that ratings agencies will give their stamp of approval, analysts said.