Page last updated at 18:43 GMT, Tuesday, 2 March 2010

Euro drops to lowest level in 10 months against dollar

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The euro fell to its lowest level against the dollar for 10 months amid continuing concerns over Greece's debt crisis, before recovering slightly.

Persistent worries over its 300bn euro ($419bn; £259bn) debt has weighed on the European single currency.

The euro traded at $1.3436 in late morning, its lowest since May 2009, before strengthening to $1.3606.

The pound was lower for a sixth day, down 0.3% to $1.4958 following concerns over a possible hung parliament.

Investors are concerned that a hung parliament would make it difficult for any government to deal decisively with the UK's high level of debt.

The euro was up 0.6% against the pound, at 90.76 pence.

The UK - and eurozone members such as Greece and Spain - have borrowed heavily, making financial markets more nervous about their ability to pay.

European Commission President Jose Manuel Barroso told Austrian newspaper Kurier that European Union (EU) governments need to be more disciplined over their public finances.

"Every euro spent to finance the debt cannot be used for schools, hospitals or innovation," Mr Barroso said.

Mr Barroso also told Austrian newspaper Kurier that European Union (EU) governments need to be more disciplined over their public finances.

Bail-out concerns

A wobble such as sterling went through on Monday is not the major event. The "chartist" faction in the markets, which believes graphs have their own logic, point to the "psychological" nature of $1.50, and believe once sterling decisively breaches this it has a long way to fall before it bounces. We will see
Paul Mason, Newsnight

Greece is moving ahead with efforts to trim its vast budget deficit, as it struggles to sort out its finances.

But the proposed austerity measures - such as freezing public sector pay, raising taxes and changing the pension system - have provoked huge street protests.

Greece has pledged to reduce its deficit from 12.7% - more than four times eurozone rules - to 8.7% during 2010.

Greece's Prime Minister George Papandreou is due to visit German Chancellor Angela Merkel in Berlin on Friday, in what could be a key meeting to decide what, if any, Europe-wide assistance Greece receives.

She said again on Sunday that Greece had to sort out its own problems.

"We have a contract which rules out the possibility of bailing out other nations," said Ms Merkel.

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