Euro slides in London

The euro fell to a three-week low against the dollar and dropped against the yen on Thursday after data painted a grim picture of the eurozone economy as it struggles with the debt crisis now in its fourth year. Output in the 17-country eurozone slid by 0.6 percent in the last three months of 2012, more than the 0.4 percent decline expected in a Reuters poll and deepening its recession.
The bloc's two largest economies, France and powerhouse Germany, also shrank by more than expected in the final quarter, casting doubt on forecasts of a recovery in early 2013. That bolstered inflows into safe-haven German Bunds and fanned expectations the European Central Bank will lower interest rates in the next few months.
ECB Vice President Vitor Constancio said negative interest rates - where banks effectively pay the central bank to hold their cash securely - were still a possibility, although no decision has been made. The euro was down 1 percent on the day against the dollar, hitting a three-week low of $1.3315, well below a one-week high of $1.3520 struck on Wednesday and moving further away from its 15-month high of $1.3711 hit on February 1.
Support was cited at around $1.3260, its 55-day moving average, with stop-loss sell orders below that. Against the yen, the euro fell to as low as 124.01 yen. It was last trading down more than 1 percent at 124.29 yen.
"There are quite a few people out there who are nervous about the scales the euro has gone to and then this morning's growth data kicked it all off (euro losses)," said Neil Mellor, currency strategist at Bank of New York Mellon. The euro has risen 1 percent against the dollar and 9 percent against the yen this year after banks repaid some crisis loans to the ECB, effectively tightening liquidity while other major central banks have been printing more money.
Investors will stay cautious on the euro given the risk of a tough statement on currencies from a G20 summit in Moscow this weekend. Speculation has continued that Japan might come under pressure to slow the yen's slide. Against the yen, the dollar, was down 0.1 percent at 93.30, well below a 33-month high of 94.465 set on Monday.