June 25 (Bloomberg) -- The euro weakened before a European Union summit later this week and as Italy and Spain prepare to sell debt tomorrow amid concern Europe’s fiscal crisis is infecting bigger economies.
The 17-nation currency extended last week’s 0.5 percent drop versus the dollar as German Chancellor Angela Merkel rejected joint euro-bloc bonds or bills and the nation of Cyprus requested bailout funding from European authorities. The yen strengthened on demand for haven assets as stocks slid. South Africa’s rand fell against all of its major peers, extending its slide to three days, after Citigroup Inc. cut China’s growth forecast over European debt concern.
“We expect Germany to hold their stance about not wanting debt mutualization or any sort of common bond,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a telephone interview. “The realization set in over the weekend that we’re not going to get anything more than what leaders have already talked about in terms of a growth pact.”
The euro declined 0.6 percent to $1.2501 at 2:47 p.m. New York time after touching $1.2471, the least since June 12. It tumbled 1.5 percent to 99.60 yen. The Japanese currency strengthened 0.9 percent to 79.68 per dollar after depreciating to 80.62, the weakest level since April 27.
Europe’s common currency has fallen 3.6 percent against the dollar this year, with the yen decreasing 3.5 percent. Japan’s currency has gained 0.1 percent on the euro.
Commodity-linked currencies such as the Canadian and Australian dollars dropped today against most major peers as futures for crude oil fell after dropping last week.
India’s currency pared a gain as the government raised the ceiling on the amount of rupee-denominated government bonds overseas investors can hold.
The Standard & Poor’s 500 Index fell 1.7 percent and the MSCI World Index of shares dropped 1.5 percent. The Dollar Index, which tracks the U.S. currency against those of six trading partners, advanced 0.3 percent.
The shared currency is down from this year’s high of $1.3487 on Feb. 24 and has depreciated 2.4 percent this year, the most among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has risen 1.6 percent and the yen has fallen 2.3 percent.