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TOKYO: The euro sank to a 13-month low against the dollar in Asian trade Monday, hit by signs of escalating financial turmoil in Europe, dealers said.
They said that after the US Congress finally passed a Wall Street bailout bill, traders were turning their attention to the problems among European banks.
The euro fell to as low as 1.3610 dollars in early Asian trade. It was at 1.3647 by late morning in Tokyo, down from 1.3781 in New York late Friday.
The euro slipped to 142.50 yen from 145.16. The dollar dropped to 104.42 yen from 105.27.
The US Congressional approval Friday of a 700-billion-dollar Wall Street rescue package prompted markets "to change their focus from the financial turmoil in the US to Europe," according to Barclays Capital analysts.
"The euro is expected to continue to extend its losses against major currencies," they predicted.
Germany's fourth biggest bank, Hypo Real Estate, had to be rescued Sunday as problems in the European financial sector deepened.
Worries over whether the Europeans can contain the turmoil grew after the leaders of France, Germany, Italy and Britain vowed Saturday to protect fragile banks but did not discuss a continent-wide financial rescue package.
Given the various economic conditions in each of the eurozone member countries, "it looks difficult for authorities to take dramatic and quick action like the US," the Barclays analysts wrote in a note to clients.
"As financial turmoil is showing signs of spreading in Europe, currency markets will test the tenacity of European authorities," they added.
Markets were looking ahead to a meeting Friday of finance chiefs from the Group of Seven rich nations, waiting for any announcements on coordinated action such as liquidity injections or interest rate cuts, dealers said.
A speech Tuesday by US Federal Reserve Chairman Ben Bernanke will also be closely watched for any clues on the possibility of a US interest rate cut.
- AFP/yb
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