AFP - The euro fell on Wednesday under 1.34 dollars for the first time in more than 10 months, hit by talk of an IMF-led aid deal for Greece and a downgrade to Portugal's long-term debt rating, analysts said. The European single currency sank to 1.3345 dollars in late morning London trade -- the lowest point since May 8, 2009. The euro later stood at 1.3381 dollars, down sharply from 1.3496 dollars in New York late on Tuesday. Against the Japanese currency, the dollar rose to 91.20 yen from 90.42 yen late on Tuesday. Sterling was lower as Britain's Labour government prepared to unveil its latest annual budget, aiming to cut public debt in a bid to woo voters and soothe investors before a general election expected in May. The main focus was on Greece, whose partners in the 16-nation eurozone were close to an accord that would give the International Monetary Fund the central role in granting Athens loans, a European diplomatic source told AFP on Tuesday. The euro tumbled as "the foreign exchange markets are interpreting the IMF solution as a sign of the weakness of European policy," Commerzbank analyst Ulrich Leuchtmann said. The proposed deal would also provide for tough sanctions for eurozone budget transgressors, in line with Germany's priorities, the diplomatic source added. The accord, which would see eurozone nations top-up the main IMF loan, was brokered between France and Germany. It was due to be announced Thursday morning in Brussels at a specially convened summit of eurozone leaders called by EU president Herman Van Rompuy. Elsewhere, Fitch Ratings downgraded Portugal's long-term debt rating on Wednesday and gave it a negative outlook, saying a "sizeable fiscal shock" reduced the eurozone country's creditworthiness. On a positive note, a survey published on Wednesday showed firms in Germany -- Europe's biggest economy -- were much more confident about their future in March. The closely-watched Ifo survey jumped to 98.1 points, the highest level since June 2008, rebounding after a surprise fall in February to 95.2 points. The data was significantly higher than the 95.9 points expected by analysts Dow Jones Newswires had polled. In London on Wednesday, the euro was at 1.3381 dollars against 1.3496 dollars on Tuesday, at 122.04 yen (122.04), 0.8935 pounds (0.8973) and 1.4287 Swiss francs (1.4271). The dollar stood at 91.20 yen (90.42) and 1.0677 Swiss francs (1.0572). The pound was at 1.4975 dollars (1.5037). On the London Bullion Market, the price of gold fell to 1,095.82 dollars an ounce from 1,101.50 dollars an ounce on Tuesday.

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