The euro fell to an eight-month low against the dollar before European finance ministers gather today to weigh the threat of a default in Greece, which is making fresh budget cuts to secure an international bailout. The 17-nation euro slid for a second day ahead of the meeting, at which officials will discuss how to shield banks from the region’s debt crisis and consider increasing their rescue fund. The dollar touched a two-week high versus the yen after a survey showed that sentiment at Japan’s biggest manufacturers remained below levels seen before a record earthquake struck in March. The baht slid to the lowest in more than a year as data showed Thailand’s export growth slowed. Europe’s “crisis will probably be stretched for many, many months,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “A crisis prolonged means the euro will keep sliding.” The euro depreciated to $1.3324 per dollar as of 1:30 p.m. in Tokyo from $1.3387 in New York last week, after declining to $1.3314, its weakest since Jan. 18. The common currency slid to 102.56 yen from 103.12 yen on Sept. 30, when it lost 1.3 percent. The dollar was at 76.98 yen from 77.06 yen, after earlier touching 77.27, the strongest since Sept. 15. The Australian dollar weakened 0.5 percent and touched 95.93 U.S. cents, the lowest since Dec. 1, 2010, while New Zealand dollar’s fell to as low as 75.74 U.S. cents, the least since March 30. Singapore’s dollar fell 0.4 percent to S$1.3126 per dollar, after slipping to S$1.3140, this year’s low. Australian, Chinese and South Korean financial markets are shut today for public holidays. The MSCI Asia Pacific Index slid 3.3 percent. Greek Austerity Today’s meeting in Luxembourg was the original target date for approving an 8 billion-euro ($11 billion) loan payment to Greece, the sixth installment of the 110 billion-euro lifeline put together at the outbreak of the crisis in May 2010. That decision was pushed back until mid-October as Greek Prime Minister George Papandreou tries to close a deficit gap. Greece’s government approved 6.6 billion euros of austerity measures including firing state workers, according to an e- mailed statement from the Athens-based Finance Ministry yesterday. French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet on Oct. 9, said a person with knowledge of the plan, who declined to be identified because the date hasn’t been formally announced. There’s “no credible alternative” to channeling aid to Greece, Sarkozy said Sept. 30 after meeting Papandreou. Stemming Contagion His remarks signal the fight over an expansion of Europe’s bailout tool kit that will follow the enactment in coming weeks of the upgraded 440 billion-euro European Financial Stability Facility. “It’s hard to see a resolution,” said Westpac’s Speizer. “A full bailout and the stemming of contagion coming out of Europe requires a lot of money, certainly more than the 440 billion euros that they’ve agreed on so far.” Futures traders increased bets that the euro will decline against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission showed Sept.30. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 82,473 on Sept. 27, compared with net shorts of 79,460 a week earlier. The yen maintained a two-day drop against the dollar after the Bank of Japan said in Tokyo today that its quarterly Tankan index of sentiment was 2 in September from minus 9 in June. The reading was below the reading of 6 in March and in line with the median estimate of 23 economists surveyed by Bloomberg News. U.S. Manufacturing Japan’s Nikkei 225 (NKY) Stock Average declined 2.5 percent. The nation’s large manufacturers expect the yen will average 81.15 per dollar this fiscal year, according to the BOJ’s survey. The dollar was also supported before data today that may show U.S. manufacturing maintained growth. The Institute for Supply Management’s factory index was at 50.3 in September, above the 50 level that divides expansion and contraction, from 50.6 in August, according to the median estimate of economists. A final reading for a euro-zone manufacturing gauge will confirm a drop to 48.4 last month, a separate survey showed before the figures today, the least since August 2009. “The fact that there are some indicators in the U.S. that are showing at least a little bit of strength at a time when the growth momentum in the euro zone is stalling, that should oblige euro-dollar to move lower,” said Callum Henderson, global head of foreign-exchange research in Singapore at Standard Chartered Plc. Thailand Exports The dollar has advanced 8.2 percent in the past month, the best performer among the 10 developed-nation peers tracked by Bloomberg Correlation-Weighted Currency Indexes. The greenback tends to appreciate during economic and financial turmoil because it benefits as the world’s reserve currency. Thailand’s baht slumped 0.4 percent to 31.31 per dollar. It earlier touched 31.34, the weakest level since Aug. 31, 2010. The nation’s overseas shipments, which account for about two-thirds of its economy, rose 28 percent in August from a year earlier after having increased 36 percent in July, the central bank said on Sept. 30. The current account, a broad measure of trade, showed a shortfall of $697 million from a surplus of $3.4 billion in July. To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; 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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