The dollar dropped versus the yen for the first time in six days as U.S. retail sales fell last month more than economists forecast, adding to evidence that the economy recovery is stalling. The euro slid against the yen as Europe’s industrial output rose less than expected and Spain’s financial institutions borrowed a record amount from the European Central Bank. Sterling touched a two-month high versus the dollar as the U.K.’s unemployment fell and the number of jobless benefit claimants dropped to the lowest in a year. “The market is trying to reprice the growth outlook, and that has contributed to dollar weakness,” said Jessica Hoversen, an analyst in Chicago at the futures broker MF Global Holdings Ltd. The dollar slid 0.3 percent to 88.44 yen at 8:59 a.m. in New York, from 88.74 yesterday. The euro fell 0.4 percent to 112.48 yen, from 112.90 yesterday. The euro was little changed at $1.2718, compared with $1.2724, after touching $1.2739 yesterday, matching the high on May 12. U.S. retail sales decreased 0.5 percent in June after falling a revised 1.1 percent in the previous month, the Commerce Department reported today in Washington. The median forecast of 75 economists in a Bloomberg News survey was for a 0.3 percent drop. Sterling advanced 0.4 percent to $1.5232, from $1.5178, after touching $1.5291, the highest level since May 3. The pound appreciated 0.7 percent to 83.29 pence per euro. Europe’s Output The 16-nation currency fell versus the yen as Eurostat in Luxembourg reported that industrial production in the euro area increased 9.4 percent in May from a year ago. The median forecast of 15 analysts in a Bloomberg News survey was for an 11.4 percent gain. A report from the Bank of Spain showed the nation’s lenders borrowed a record 126.3 billion euros ($161 billion) from the ECB in June. Spain’s financial institutions increased borrowing 48 percent from 85.6 billion euros in May. That compares with a drop of 4 percent to 496.6 billion euros that the ECB provided lenders in the whole euro area. Spanish banks haven’t sold any bonds publicly in the past two months on concern the nation won’t be able to cut its deficit without hurting the economy. The extra yield that investors demand to hold Spain’s government bonds compared with benchmark German debt has widened to 2 percentage points, from 0.59 percentage point at the start of the year. Singapore’s Growth Asian currencies rose earlier after a government report showed Singapore’s economy accelerated to a record 18.1 percent pace in the first half, adding to signs the region is shrugging off the European debt crisis. Singapore’s gross domestic product expanded at a 26 percent annualized rate in the second quarter from the previous three months, after a revised 45.9 percent gain in January to March, the trade ministry said. The growth “should reinforce the view that fears from the euro zone crisis may be exaggerated,” Philip Wee, senior currency economist in Singapore at DBS Group Holdings Ltd., wrote in a research note. “Sentiment should remain constructive, not only for the Singapore dollar, but also other Asia ex-Japan currencies and commodity currencies.” South Korea’s won jumped 0.8 percent to 1,202.33 against the greenback, and Singapore’s dollar was little changed at S$1.3750 after touching a three-week high of S$1.3733. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net

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