By Linus Chua and Paul Gordon May 18 (Bloomberg) -- The euro fell toward a four-year low ahead of a German report forecast to show investor confidence deteriorated. Asia stocks slid to the lowest in three months while copper rebounded from its biggest slump in 16 months. Europe’s single currency weakened to $1.2334 as of 2:03 p.m. in Tokyo, from $1.2395 in New York yesterday. The MSCI Asia Pacific Index lost 0.5 percent to 116.18, while copper gained 1.4 percent. Standard & Poor’s 500 Index futures were little changed after the gauge rebounded from a 1.8 percent plunge to end 0.1 percent higher. The ZEW Center for European Economic Research’s study of German investor sentiment probably fell by the most 19 months, according to the median forecast of 35 economists in a Bloomberg News survey. Europe’s finance ministers are struggling to convince investors that budget cuts across the continent won’t tip the region back into recession. “Near term, markets are going to be weighed down by the pressures in the European Union,” said Rahul Chadha, who manages $1.5 billion in stocks at Mirae Asset Global Investment in Mumbai. “Investors are going to look at more sincere or serious steps by these nations to cut down their deficits.” The euro weakened against 14 of its 16 major counterparts, falling as much as 1 percent to $1.2235, the lowest level since April 18, 2006. It weakened to 113.78 yen from 114.77 yen yesterday, when it reached 112.46 yen, the least since May 6. Austerity Measures European finance ministers said Greece’s debt crisis won’t unleash a continent-wide austerity drive with the potential to tip the economy back into a recession and further undercut the euro. Only high-deficit countries including Spain and Portugal will be ordered to make additional deficit cuts, while budget policies will remain untouched in better-off nations such as Germany and Finland. “Some of the austerity measures that are going to be put in place will see euro-zone growth crimped and it was already looking fairly weak,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We’ll probably see the euro slide continue in coming sessions, perhaps toward $1.20.” Australia’s dollar approached a three-month low after minutes of the central bank’s May 4 meeting damped expectations for continued interest rate increases. The currency declined 0.5 percent to 87.16 U.S. cents from yesterday when it touched 86.86 cents, the least since Feb. 9. Asian Stocks About five stocks fell for every four that gained on the MSCI Asia Pacific Index, extending the measure’s 2.8 percent slump yesterday, the biggest drop in almost six months. China’s Shanghai Composite Index declined 0.8 percent, extending a 5.1 percent plunge yesterday, the most in more than eight months. Japan’s Nikkei 225 Stock Average climbed 0.4 percent. South Korea’s Kospi index lost 0.8 percent. U.S. stocks rose yesterday, with the Dow Jones Industrial Average reversing a 184-point drop, as the euro’s rebound bolstered optimism that the currency will weather the region’s debt crisis. Inpex Corp., Japan’s largest oil and gas explorer, fell 2.3 percent. Mitsubishi Corp., Japan’s biggest commodities trader, lost 1.6 percent. Korea Zinc Co., the world’s second-biggest zinc smelter, lost 6 percent in Seoul. Copper for three-month delivery advanced to $6,560 per metric ton. The metal plunged 6.6 percent yesterday, the most since January 2009. Crude oil rose 0.7 percent to $70.59 a barrel in New York, snapping five days of declines, as some investors took the view yesterday’s drop below $70 a barrel made the commodity attractive to buy. Bond risk in Thailand fell as the government engaged protesters in cease-fire talks after extending a deadline for women and children to leave an area where gun battles have taken place. The cost of credit-default swaps insuring Thai government debt from default lost 9 basis points to 156 basis points, halting a three-day climb, according to Royal Bank of Scotland Group Plc prices. To contact the reporters on this story: Linus Chua in at lchua@bloomberg.net

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