The New Zealand and Australian dollars fell to two-week lows against the yen and dollar as concern that the global economic recovery is weakening sapped demand for stocks and currencies linked to growth. Both South Pacific currencies also slid on speculation European leaders will struggle to implement a bailout package for Greece and fail to prevent the debt crisis from spreading. Australia’s currency dropped against most of its 16 major counterparts after a report showed Australian business confidence fell to a six-month low in June. “You cannot ignore risk and risk aversion, and very clearly we’re seeing a deterioration in global risk sentiment,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “Both Aussie and kiwi should be lower.” New Zealand’s dollar fell to 65.75 yen as of 1:34 p.m. in Sydney from 66.55 yen in New York yesterday, after sliding to as low as 65.65 yen, its weakest since June 28. The kiwi dropped to 82.09 U.S. cents from 82.91 cents, after touching 81.89, the lowest level since June 29. Australia’s dollar sank to $1.0578, its weakest since June 29, before trading at $1.0607 from $1.0656 yesterday. It declined to 85.01 yen from 85.53 yen, after reaching 84.78, its lowest since June 28. The MSCI Asia Pacific Index of regional shares lost 1.7 percent and the Nikkei 225 Stock Average dropped 1.5 percent. The Standard and Poor’s 500 Index slumped 1.8 percent yesterday in New York and the Thomson Reuters/Jefferies CRB Index of 19 Raw Materials fell 0.9 percent. Business Confidence Demand for the so-called Aussie fell after the confidence index dropped to zero from 6 in May, according to a National Australia Bank Ltd. survey of more than 400 companies from June 24 to June 30 released in Sydney today. The report is “weighing on the Aussie dollar,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “It’s clearly very risk off at the moment.” Weaker confidence and slower consumer spending add to signs that the Reserve Bank of Australia will keep its key interest rate unchanged at 4.75 percent until December, NAB said today. Swaps traders are pricing in a 32-basis-point cut to the RBA’s key rate in the next 12 months, a Credit Suisse AG index showed today. As recently as June 15, the gauge signaled 14 basis points of tightening. ‘Fairly Cynical’ A statement released by the 17 euro-area finance ministers after yesterday’s Brussels meeting pledged to flesh out details of a new strategy to end the 21-month-old crisis “shortly,” without setting a timeline. Luxembourg Prime Minister Jean- Claude Juncker said the reassurances are “offering adequate responses” to concerns about Spain and Italy as well. “The market is fairly cynical about to what extent the European issue can be solved,” said Thomas Averill , a director in Sydney at Rochford Capital, a currency and interest rate risk management company. “It’s Italy today, it was Greece the day before and it will probably be Spain and Portugal tomorrow. That specter on the horizon is capping gains.” The yield on 10-year Italian bonds rose 41 basis points to close at 5.68 percent yesterday, the highest in more than a decade, pushing the yield premium investors demand to hold the debt over German bunds to a euro-era record of 301 basis points. Italy faces 175 billion euros in debt maturities this year and has 1.6 trillion euros of bonds outstanding, the world’s third-largest debt pile after the U.S. and Japan. To contact the reporter on this story: Kristine Aquino in Singapore at Kaquino1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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