By Dennis Pettit

NEW YORK, May 21 (MNI) - The dollar was nursing a mixed tone vs. the euro and the yen in afternoon dealings Friday as markets settled back into some sense of normalcy after back to back sessions of excessive volatility in both currencies and stocks.

Euro-dollar was changing hands at $1.2575 in afternoon dealings Friday, in the upper reaches of the day's $1.2480/1.2595 US hours range, the euro able to regain some poise in the Friday U.S. session after beginning the day near session lows and gradually climbing higher amid light flows.

BRUSSELS (MNI) - New sanctions for European Union countries that infringe on budget rules are being considered by a European task force, but probably won't include EU treaty changes, European Council President Herman Van Rompuy said on Friday.

"We discussed sanctions and I could say...there was a broad consensus on having financial sanctions and non-financial sanctions," Van Rompuy told reporters in Brussels after the first meeting of the task force that he chairs.

If new sanctions are needed to enforce budgetary discipline, they will be put in place, he said.

FRANKFURT (MNI) - The euro is not weak at present, rather its purchasing power is safe and will remain so, European Central Bank Executive Board member Juergen Stark said Friday.

"I would like here from the side of the ECB to give a clear signal to citizens that it is not the case that we now have a weak euro, rather the purchasing power of the currency is secured and will remain secured," he told Germany's WDR5 radio.

"Since the emergence of the euro, we have done excellent work" in maintaining price stability, Stark insisted.

FRANKFURT (MNI) - The euro is a credible currency and not in danger, ECB President Jean-Claude Trichet said in an interview with Germany's Frankfurter Allgemeine Zeitung released Friday.

"The euro is a credible currency whose inflation rate has been below 2% for more than eleven years," Trichet said. "The euro is not in danger."

Asked about recent forex intervention rumors after the single currency's sharp decline, Trichet said: "I never comment on interventions."

FRANKFURT (MNI) - The euro is a credible currency and not in danger, ECB President Jean-Claude Trichet said in an interview with Germany's Frankfurter Allgemeine Zeitung released Friday.

"The euro is a credible currency whose inflation rate has been below 2% for more than eleven years," Trichet said. "The euro is not in danger."

Asked about recent forex intervention rumors after the single currency's sharp decline, Trichet said: "I never comment on interventions."

BERLIN (MNI) - Germany's upper house of parliament, the Bundesrat, which represents the 16 states, Friday passed a bill authorizing the country's share of the financing in the EU rescue plan for fiscally troubled member states.

Given that Germany's share of the loan guarantees will come out of the federal budget, the Bundesrat would have had only the right to temporarily delay the bill. But it did not object to the bill.

BRUSSELS (MNI) - The European economic recovery depends on shoring up public finances in the 27 member EU, Swedish Finance Minister Anders Borg said on Friday.

"If we want to secure the recovery, we need to secure the public finances," Borg told reporters as he arrived for a meeting in Brussels where economic governance reforms will be discussed.

He said this should include "more front-loaded consolidation and more emphasis on debt."

BRUSSELS (MNI) - The 27 members of the European Union haven't been taking the bloc's debt rules seriously enough and need to put more emphasis on it in the future, a European Commission spokesman said on Friday.

The comments come ahead of a meeting of European Council President Herman Van Rompuy's task force, which aims to increase economic governance in the European Union to reassure worried investors that the bloc is in control of its heavy debt burden.