Frankfurt The euro weakened for a seventh day against the dollar as Greek politicians struggled to form a new government after elections on the weekend raised the prospect of the country withdrawing from the currency bloc.
The 17-nation euro extended its longest run of declines against the greenback since September 2008 as German Chancellor Angela Merkel rejected government stimulus as the way to spur economic growth, setting up a clash with French president-elect Francois Hollande. The pound dropped against the dollar as a report showed UK house prices fell in April. Australia's dollar declined after the trade deficit widened.
"It's hard to be anything but bearish" on the euro, said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. "The Franco-German alliance is being destabilised but more importantly there's this risk of contagion in Greece, particularly into the banking system."
The euro declined 0.2 per cent to $1.3024 after sliding to $1.2955 yesterday, the weakest level since January 25. The shared currency dropped 0.4 per cent to 103.88 yen. It slipped to 103.24 yesterday, the lowest since February 16. The yen gained 0.2 per cent to 79.77 per dollar.
The euro has weakened 4.1 per cent over the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar rose 2.6 per cent, and the yen dropped 0.3 per cent.
The pound declined from within two US cents of an eight-month high against the dollar after an industry report showed a gauge of house prices declined.
The pound fell 0.3 per cent to $1.6135 after rising to $1.6302 on April 30, the highest level since Aug-ust 31. Sterling was little changed. The Royal Institution of Chartered Surveyors said its index dropped to minus 19 from minus 11 in March.
