Euro falls broadly in London

The euro tumbled to a 15-month low against the dollar and an 11-year low versus the yen on Thursday as concerns about eurozone sovereign funding pressures and signs of weakness in the region's banks prompted investors to sell the shared currency. Hedge funds and macro funds shunned the euro despite solid demand at a French auction of long-dated government bonds, pushing it to $1.2825, its weakest since September 2010.
France sold nearly 8 billion euros in longer-dated government debt to investors who were attracted to the bonds' higher coupons following a rise in yields. But analysts said upcoming Italian and Spanish government bond sales next week, seen as those countries' first major refinancing tests of the year, would be likely to keep the market on edge and the euro under pressure.
The euro's reaction to the French auction was a repeat of selling seen the previous day, when investors dumped the currency despite reasonable demand at an auction of German bonds. Analysts said this was a sign of strong negative sentiment towards the single currency. "It was the same reaction as the German auction yesterday ... People are just looking for an excuse to sell euro/dollar, after it rose on the first trading day of the year," said Adam Myers, currency strategist at Credit Agricole CIB.
Investors were also reluctant to buy the euro as a heavily discounted rights issue from Unicredit, Italy's largest bank, underscored funding problems in the euro zone's third largest economy. Meanwhile, latest data from the European Central Bank suggested banks were hoarding cash rather than lending to each other despite the ECB providing almost half a trillion euros of ultra-cheap three-year loans last month.
Analysts said further signs of trouble in the banking sector could trigger more weakness in the shared currency. Broad weakness in the euro also saw it fall to 98.56 yen, its lowest since 2000, while suffering against the Australian and Canadian dollars. The single currency is hovering within sight of its lowest level against a trade-weighted basket in 1-1/2 years, according to the European Central Bank's index.
The dollar rose 0.6 percent against a currency basket, with its index trading at 80.633. Sluggishness in the euro helped keep the US currency near levels touched last week that are its strongest in roughly a year. The euro traded at 1.2184 Swiss francs, little changed on the day.