The euro fell from a five-month high against the dollar as renewed signs of debt problems at European banks and nations such as Ireland and Portugal reduced demand for assets in the 16-nation region. The dollar weakened earlier against most of its major counterparts amid speculation the Federal Reserve will take additional steps to ease monetary policy, damping demand for U.S. assets. The yen weakened versus the dollar as a survey is forecast to show a slowing pace of improvement in the country’s business confidence. “The credit-risk story is getting worse in Europe with the peripherals, the German banks,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “Ihere are multiple stories that indicate the underlying credit is not so great.” The euro slid 0.2 percent to $1.3471 at 11:01 a.m. in New York, from $1.3492 on Sept. 24. It touched $1.3507, the highest level since April 20. The currency traded at 113.49 yen, compared with 113.62 yen. The dollar gained 0.1 percent to 84.25 yen from 84.21. The Standard & Poor’s 500 Index fell 0.1 percent. Crude oil futures declined 0.5 percent to $76.10 a barrel after reaching the highest level since Sept. 14. European Focus “The euro can’t really seem to sustain an upward drive against the dollar given lingering concerns about the bloc’s banking sector.” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency- exchange network. The European Union was checking whether the financial help received by the German regional lenders BayernLB, WestLB AG and HSH Nordbank AG is compatible with European law, Der Spiegel reported Sept. 25, citing a letter from the institution to Germany’s deputy finance minister, Joerg Asmussen. The European Central Bank considered activating the euro- region’s rescue fund to assist Ireland in refinancing debt, the German newspaper Handelsblatt reported, citing unidentified government officials. Various euro-area countries had already been told to raise money on Ireland’s behalf if the need arose, the newspaper said, without giving more details. In the end, the authorities decided against the plan, the report said. Irish update Ireland will disclose the final expenses of bailing out Anglo Irish Bank Corp. this week. Finance Minister Brian Lenihan, who said Sept. 22 that the costs will be “manageable,” is scheduled to publish the latest estimates by Oct. 1. While the state has pledged 22 billion euros ($29.6 billion) for Anglo Irish, S&P says the final bill may be 35 billion euros, equal to 20 percent of gross domestic product. “Irish downgrade issues will continue to put pressure on the euro,” said Fabian Eliasson, Head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “There is a pullback after we ended last week so bullish.” The Bank of Japan’s Tankan survey a quarterly index of sentiment at large manufacturers rose 6 points in September, the least since March 2009, according to the median forecast of 19 economists surveyed by Bloomberg News before tomorrow’s report Economy Minister Banri Kaieda today said further BOJ cash injections may be effective in influencing the yen, a sign Prime Minister Naoto Kan’s administration wants the central bank to step up its efforts. Bank of Japan Governor Masaaki Shirakawa today said the central bank is ready to take policy action if necessary. He spoke at meeting with business executives in Osaka. Wal-Mart Deal The South African rand rallied to its strongest level in more than 2 1/2 years against the dollar as gold surged to a record and Wal-Mart Stores Inc. offered to pay as much as $4.2 billion for Johannesburg-based Massmart Holdings Ltd., South Africa’s biggest food and general goods wholesaler. South Africa’s currency appreciated as much as 0.8 percent to 6.9648 per dollar, the strongest since January 2008, and traded at 7.0062, from a previous close of 7.0190. Canada’s dollar traded near a six-week high and the Australian dollar traded near its strongest level in two years against the greenback. The Canadian currency declined 0.3 percent to C$1.0268 per U.S. dollar, compared with C$1.0241 on Sept. 24. It reached C$1.0192 on Sept. 22, the most since Aug. 6. Australia’s dollar gained 0.3 percent to 96.18 U.S. cents and touched 96.25 cents, the strongest since July 2008. To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net. To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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