LONDON, Sep 14, 2010 (AFP) - The euro slid against the dollar on Tuesday as data showed a collapse in German investor confidence, while the US unit fell to near parity against the Swiss franc and hit a fresh 15-year low versus the yen.
In morning trade here, the European single currency dropped to 1.2845 dollars from 1.2880 dollars on Monday.
The dollar dropped to 83.07 yen -- the lowest level since May 1995 -- after Japanese Prime Minister Naoto Kan won a party leadership election, making swift intervention in foreign exchange markets unlikely, dealers said.
The Swiss franc, seen as a safe-haven investment in times of economic uncertainty, rose to 0.9998 francs to the dollar -- the highest level since December.
The euro meanwhile stumbled as the ZEW institute's sentiment indicator for Europe's biggest economy Germany plunged 18.3 points to minus 4.3 points in September -- its fifth consecutive monthly drop and its second unexpectedly sharp loss in a row.
Tuesday's survey "reflects the idea that growth in Germany is expected to fall back significantly during the next six months, following the exceptionally strong growth seen in the first half of the year," said ABN AMRO bank economist Aline Schuiling.
"Although this is in line with our base scenario for the German economy, we think the current drop in sentiment paints an overly pessimistic picture."
Elsewhere on Tuesday, the yen rallied as Japan's centre-left Prime Minister Kan, in office for just three months, survived a leadership challenge from a veteran party powerbroker.
The "son of a salaryman" premier was re-elected by his Democratic Party of Japan (DPJ) as leader, meaning he stays on in his post after defeating party powerbroker Ichiro Ozawa, dubbed the "Shadow Shogun".
Ozawa has been more outspoken in demanding action on the yen, and so some viewed Kan's victory reducing the likelihood of faster intervention.
"As Kan will continue as prime minister, the risk of further yen strength will continue," as no change in forex policy is expected, said Toshihiko Sakai, senior dealer at Mitsubishi UFJ Trust & Banking.
The strong yen is a threat to Japan's fragile recovery and a disadvantage to exporters who can lose overseas profits when repatriated into the stronger domestic unit.
Japan's Finance Minister Yoshihiko Noda reiterated Tuesday the government would maintain the policy of intervening in markets if necessary to curb the yen's rise.
Meanwhile in Europe, the British pound was mixed in the wake of official data showing British annual inflation was flat at 3.1 percent in August compared with July.
In London on Tuesday, the euro changed hands at 1.2845 dollars against 1.2880 dollars on Monday, at 106.99 yen (107.74), 0.8343 pounds (0.8347) and 1.2878 Swiss francs (1.2974).
The dollar stood at 83.29 yen (83.64) and 1.0027 Swiss francs (1.0076).
The pound was at 1.5395 dollars (1.5428).
On the London Bullion Market, the price of gold rose to 1,253.55 dollars an ounce from 1,243.75 dollars an ounce on Monday.
