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Euro hits 11-month low amid European woes, upbeat U.S. data

(Xinhua)

08:28, December 19, 2011

NEW YORK, Dec. 18 (Xinhua) -- The euro tumbled to an 11-month low against the dollar this week as concerns over the European debt crisis intensified and upbeat U.S. economic data helped to stimulate confidence in the American currency.

The euro tumbled on Tuesday when German Chancellor Angela Merkel rejected a plan to expand the European bailout fund.

The results of an EU summit last weekend disappointed investors as they believed the agreement reached at the gathering would be unable to uproot the European debt crisis.

Furthermore, Merkel on Tuesday reiterated that she opposes expanding the size of the European Stability Mechanism. The news worried investors because they believe that the 500-billion euro fund is not enough to cover Spain and Italy if those countries need a bailout.

The euro tumbled to the lowest level since January against the dollar on Tuesday, approaching the critical psychological level of 1.30.

On Wednesday, the Italian government sold 3 billion euros of 5-year bonds and saw yields surged to 6.47 percent, the highest yield at auction since the euro's inception.

The surging borrowing costs worried investors and pressured the euro. The shared currency dipped further and broke down 1.30 against the dollar, a level never seen this year.

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