The euro weakened against most of its major counterparts before European leaders begin a two-day summit in Brussels today to discuss Greece’s financing needs as the nation struggles to stave off default. The single currency dropped for a second day against the dollar on prospects Greek Prime Minister George Papandreou will face difficulty in getting parliamentary approval next week for a package of budget cuts and asset sales. The dollar climbed against 11 of its 16 major peers after the Federal Reserve damped speculation of additional stimulus at a policy meeting yesterday. The Australian dollar declined as stocks fell. “The euro isn’t a currency that you can buy now,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest financial group by market value. “Unless Greece is able to proceed with fiscal reform at a speed the world has never seen before, additional loans will just delay a default.” The euro dropped to $1.4307 as of 6:27 a.m. in London from $1.4357 in New York yesterday, when it declined 0.4 percent. The shared currency traded at 115.11 yen from 115.28 yen. The dollar gained to 80.45 yen from 80.29 yen. European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. Antonis Samaras, leader of the opposition in the Greek parliament, said his party will vote against the government’s new austerity measures, contrary to European Union calls for unity, the Financial Times reported, citing an interview. Flashing ‘Red’ European Central Bank President Jean-Claude Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks. The link between debt problems and banks “is the most serious threat to financial stability in the European Union,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board. The dollar advanced for a second day against the yen after the Fed refrained from debasing the currency further. Policy makers decided to keep the Fed’s balance sheet at a record to spur the economy after completing $600 billion of bond purchases this month in a second round of quantitative easing, or so- called QE2. They cut growth forecasts for this year and next and raised estimates for the unemployment rate. ‘Moderate Pace’ “There’s going to be no talk of QE3 over the next couple of months,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp, Australia’s second-largest lender. “Without any further stimulus signaled there’s a good chance it could be a negative for risky assets which means it could be positive for the U.S. dollar.” The U.S. economy is recovering at a “moderate pace, though somewhat more slowly” than the central bank had expected, Fed Chairman Ben S. Bernanke said yesterday. New home sales dropped 4 percent in May after climbing 7.3 percent in April, the median estimate of economists surveyed by Bloomberg News showed before data today. Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said yesterday in a Twitter posting the Fed may signal in August plans for additional monetary stimulus. The central bank is likely to hint at another round of quantitative easing and interest rate caps at its annual symposium in Jackson Hole, Wyoming, Gross said. Australia’s dollar, known as the Aussie, weakened for a second day versus the greenback as Asian stocks slumped, reducing demand for higher-yielding assets. The Reuters/Jefferies CRB Index of raw materials slid 0.1 percent yesterday. “As commodities and stocks fall, the Aussie seems to be becoming top-heavy,” said Nobuhiko Akai, senior manager of the foreign-exchange trading department at Bank of Tokyo-Mitsubishi UFJ Ltd. The Aussie declined to $1.0560 from $1.0575 in New York yesterday. The MSCI Asia Pacific Index of regional shares dropped as much as 0.9 percent. To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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