By Lukanyo Mnyanda April 7 (Bloomberg) -- The euro traded near its lowest level against the dollar in almost two weeks as stocks in the region declined and a report showed Europe’s economic recovery came to a halt in the fourth quarter. The euro slipped the most against the Taiwanese and Canadian dollars. A European Union report showed gross domestic product in the 16-member euro area remained unchanged in the fourth quarter, making it more likely policy makers will keep interest rates at a record low when they announce their decision tomorrow. Canada’s dollar traded near the highest level since July 2008 against its U.S. peer before a report that may show business and government spending increased. The U.K. pound fell after services industries expanded less than forecast. “The euro is overvalued and it will continue to drift down,” said Adam Cole, head of global currency strategy at Royal Bank of Canada in London. “The economic and political risks are intimately linked and the prospects of a rate hike are slipping further into the future.” The euro traded at $1.3382 as of 10:55 a.m. in London, from $1.3399 yesterday, after earlier declining to $1.3357. It slid to $1.3355 yesterday, the lowest level since March 26. The 16- nation currency weakened to 42.25 Taiwanese dollars, from 42.47. It dropped to C$1.3367 from C$1.3420. It climbed to 125.84 yen, from 125.67 yen. The dollar rose to 94.02 yen from 93.79 yen. The pound slipped to $1.5196 from $1.5267. Stocks Fall The Stoxx Europe 600 Index fell 0.1 percent and futures on the U.S. Standard & Poor’s 500 Index dropped 0.2 percent after the EU report. The statistics office in Luxembourg had previously reported an expansion of 0.1 percent from the third quarter, when it rose 0.4 percent. Producer prices in the euro region declined in February from a year earlier, a separate report showed. The European Central Bank will keep the main refinancing rate at a record low of 1 percent tomorrow, according to all 62 economists surveyed by Bloomberg. Policy makers have kept the rate at that level since May. The yen fell against Asian currencies including South Korea’s won as signs of a recovery in the Asia-Pacific region boosted demand for higher-yielding assets. The World Bank said East Asian economies may have “rapid growth” in coming years. “Risk sentiment is firm, which means the downward trend in the yen may persist,” said Akane Vallery Uchida, a currency strategist at Royal Bank of Scotland Group Plc in Tokyo. The yen slipped 0.4 percent to 11.93 won. The Bloomberg- JPMorgan Asia Dollar Index, a gauge of the region’s 10 most-used currencies excluding the yen, traded near its highest since August 2008. Asian Expansion Emerging East Asia, which excludes Japan and the Indian subcontinent, will expand 7.6 percent this year, more than a November estimate of 6.4 percent, the World Bank said in its semi-annual report today. The yen stayed weaker after the Bank of Japan today left its benchmark overnight lending rate at 0.1 percent and kept its assessment of the world’s second-largest economy unchanged. The interest-rate decision was expected by all 21 economists surveyed by Bloomberg. The Canadian dollar climbed for a third day against the greenback, strengthening 0.3 percent to C$0.9986 per U.S. dollar from C$1.0016 yesterday. It strengthened to C$0.9978 earlier, the strongest level since July 15, 2008. Canada’s Ivey purchasing managers’ index probably rose to 55 last month, from a reading of 51.9 in February, according to the median prediction of 16 economists surveyed by Bloomberg. Figures above 50 indicate purchasing increased. To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net;

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