German weakness adds to euro’s woes

The euro fell against the dollar yesterday after weak German economic data fuelled concerns about slowing growth in Europe’s largest economy, and looked likely to extend losses on mounting concerns Spain may need a full bailout.

The German purchasing manager index figures came after Moody’s changed its outlook for Germany, the Netherlands, and Luxembourg to negative, warning that Europe’s top-rated countries may have to increase support for indebted states such as Spain and Italy.

Analysts said worries that more Spanish regions will follow Valencia and request financial aid from Madrid would keep Spanish bond yields high and encourage investors to sell the single currency.