By Stanley White Dec. 9 (Bloomberg) -- The euro fell against the dollar on speculation a report today will show German investor confidence dropped to near a record low, spurring the European Central Bank to cut interest rates again to combat a global recession. The euro also declined against the yen as a recession in the euro-zone reduces the appeal of assets denominated in the currency. The Australian dollar weakened from close to a three- week high after an industry report showed business confidence in the country was at a record low. “The euro is being pulled off its highs,” said Akio Shimizu, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest publicly listed lender. “No one is expecting the ZEW survey to show anything flattering about the European economy.” The euro declined to $1.2881 as of 1:23 p.m. in Tokyo from $1.2963 late yesterday in New York. It fell to 119.53 yen from 120.26 yesterday, when it rose to 120.96, the highest level since Dec. 1. The dollar was little changed at 92.79 yen. The Australian dollar fell 0.9 percent to 65.89 U.S. cents from late yesterday in New York. It also slid 0.9 percent to 61.13 yen. National Australia Bank Ltd. said its sentiment index for November fell one point to minus 30, the lowest level since the series began in 1989. Investor confidence in Germany, Europe’s largest economy, worsened in December, the ZEW Center for European Economic Research’s index of investor and analyst expectations will show today, according to a Bloomberg News survey. The index fell to minus 57 from minus 53.5 the prior month, the survey showed. The report is due at 11 a.m. in Mannheim. Price Stability ECB members Ewald Nowotny, Erkki Liikanen and Lorenzo Bini- Smaghi speak today. Risks to price stability in the 15 countries sharing the euro have fallen “significantly,” central bank President Jean-Claude Trichet said yesterday in an interview with the British Broadcasting Corp. ECB forecasts published last week show the euro-region economy will shrink about 0.5 percent next year, which would be its first full-year contraction since 1993. The MSCI Asia-Pacific index of regional shares rose 0.6 percent, a third day of gains, after the Standard & Poor’s 500 Index jumped 3.8 percent yesterday. Obama Spending In an NBC television interview on Dec. 7, Obama reiterated his commitment to the biggest investments in the nation’s infrastructure since the 1950s. The U.S. president-elect takes office Jan. 20. The European Union proposed a 200 billion euro ($257 billion) stimulus package last month. New Zealand will cut income taxes by NZ$4.4 billion ($2.39 billion) and boost construction to help the economy out of recession, Governor-General Anand Satyanand said today. Congressional lawmakers sent President Bush a draft proposal to offer $15 billion in loans to U.S. automakers General Motors Corp., Chrysler LLC. Ford Motor Co. said it won’t seek short-term bridge loans. The rescue plan, which will help the firms survive at least until March, would require the president to appoint a person or board to oversee restructuring of the auto industry. The legislation is likely to be passed and signed into law this week, House Financial Services Committee Chairman Barney Frank said yesterday. Bailout Optimism “Optimism over an agreement on a bailout for U.S. car companies is supporting global stock gains,” Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Plc in Tokyo and a former Bank of Japan currency trader, said in a research note today. “This may force the yen lower.” The pound fell to $1.4842 from $1.4915 yesterday and declined to 137.68 yen from 138.41 yen. U.K. home sales declined to the lowest level since at least 1978 as the nation plunged deeper into a recession, the Royal Institution of Chartered Surveyors said today. Real-estate agents and surveyors sold an average of 10.6 homes in the quarter through November, the least since the series began three decades ago, the Institute said. The Bank of England last week cut its benchmark interest rate to 2 percent, the lowest in a half-century, as policy makers sought to prevent deflation from taking hold in the economy. The economy contracted 0.5 percent in the third quarter, after zero growth in the second. “Sterling can lose more ground against the dollar,” said Thomas Harr, a senior currency strategist in Singapore at Standard Chartered Plc, the U.K. bank that gets most of its profit from Asia. “The outlook for the British economy looks pretty horrible. We think the BOE will cut rates quite dramatically.” The pound may fall as low as $1.35 in the first quarter as the U.K. central bank lowers its benchmark rate to 0.5 percent, Harr forecast. To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net

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