By Yoshiaki Nohara and Yasuhiko Seki May 28 (Bloomberg) -- The euro fell, heading for a sixth monthly loss against the dollar, on speculation stricter financial regulation in the wake of Europe’s debt crisis will curtail the region’s growth. The 16-nation euro was poised for a fifth weekly decline against the yen as Japan’s Finance Minister Naoto Kan said a Group of 20 summit next week may address the impact of the sovereign-debt crisis on currencies and financial regulations. South Korea’s won rose as overseas investors added to their holdings of the nation’s shares after a central bank report showed manufacturers’ confidence was near a seven-year high. “The euro will continue to be under selling pressure,” said Kuniyuki Hirai, manager of the foreign-exchange trading department in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender. “As the crisis spreads from public sectors to private ones, markets want policy makers to solve the problem rather than adding some relief.” The euro dropped to $1.2294 as of 1:40 p.m. in Tokyo from $1.2362 in New York yesterday. The currency has fallen 7.5 percent in May, the biggest monthly loss since January 2009. It fell 0.5 percent to 112.04 yen, extending this week’s decline to 1 percent. The dollar was little changed at 91.13 yen. Europe’s currency has slumped 7.9 percent this year, based on Bloomberg Correlation-Weighted Indexes. The dollar has gained 9.1 percent and the yen has advanced 12 percent. G-20 Meeting “Some nations may have an interest in discussing currencies,” Kan said in Tokyo today, speaking about the G-20 meeting of finance ministers to be held in South Korea June 4-5. “Discussion of the impact of the European situation on currencies will be on the main agenda,” as well as financial regulation and developments in the global economy, he said. The euro headed for a monthly drop against 13 of its 16 major counterparts after U.S. Treasury Secretary Timothy F. Geithner said yesterday in Berlin that the U.S. and Europe are in “broad agreement” on the need for tighter market regulation. Geithner said he discussed “all the key elements” on the financial regulation agenda with European Central Bank President Jean-Claude Trichet and Bundesbank President Axel Weber. Germany was left isolated after bringing in a unilateral ban on May 18 on naked short-selling of sovereign debt securities and financial shares. Regulators from other European Union states met two days ago to discuss the move and have so far refused to follow Germany’s lead, said Eddy Wymeersch, head of the Committee of European Securities Regulators. ‘Haunt the Euro’ “Until we can get hard evidence that budget deficit reductions in Europe are on the right track, the debt crisis will continue to haunt the euro,” said Kazumasa Yamaoka, a senior analyst in Tokyo at GCI Capital Co., an investment advisory company. “The euro will struggle to gain the full confidence of investors.” Korea’s won headed for its biggest two-day gain in a year after the Bank of Korea said an index measuring manufacturers’ expectations held near the strongest level since the fourth quarter of 2002. “We are in risk-on mode,” said Seunghyup Yang, a foreign- exchange trader at Societe Generale SA in Seoul. “We cannot rule out intervention when the won touches the 1,190 level.” The won rose 2.3 percent to 1,196.20 per dollar after jumping 2.3 percent yesterday. Nine of Asia’s 10 most-traded currencies gained versus the yen as Asian stocks climbed before reports that economists said will show U.S. consumer spending gained and Japan’s industrial production advanced. ‘Turn Optimistic’ “When expectations rise again about economic conditions, markets may turn optimistic,” said Daisaku Ueno, president at Gaitame.Com Research Institute Ltd., a unit of Japan’s largest currency margin company. “The impact can be quite big, especially because negatives weighed on markets this month. Cross currencies may advance against the yen.” U.S. consumer spending gained 0.3 percent in April, according to a Bloomberg News survey before today’s Commerce Department report. Japan’s factory output advanced 2.5 percent in April after rising 1.2 percent in March, according to a separate Bloomberg survey before the May 31 report. Indonesia’s rupiah gained 0.3 percent to 9,185 versus the dollar and the Taiwan dollar rose 0.5 percent to NT$32.019. To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net.

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