The pound fell against the euro on optimism progress is being made in agreeing a plan to end the European debt crisis. Sterling weakened versus most of its 16 major peers tracked by Bloomberg as the FTSE 100 Index fell 0.6 percent and the Stoxx Europe 600 Index dropped 0.7 percent. It declined even after a report showed retail sales, including fuel, unexpectedly increased the most in five months in September. Gilts declined. Today’s pound move “is all euro-zone driven,” said Chris Walker, a currency strategist at UBS AG in London. The pound weakened 0.3 percent to 87.50 pence per euro as of 10:54 a.m. London time. It was little changed at $1.5787 and 121.21 yen. The pound has slid 1 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which measure a basket of 10 developed-market currencies. It has gained 3.1 percent against the euro since the start of the second half as officials struggle to agree on a resolution to the area’s debt crisis. The 10-year gilt yield rose three basis points, or 0.03 percentage point, to 2.50 percent. The 3.75 percent security maturing September 2021 declined 0.26, or 2.6 pounds per 1,000- pound face amount, to 110.905. The two-year note yield was little changed at 0.60 percent. Retail sales including fuel rose 0.6 percent from August, when they fell a revised 0.4 percent, the Office for National Statistics said today in London. That’s the biggest gain since April and compares with the median forecast of 23 economists in a Bloomberg survey for no change. U.K. government debt has handed investors 12 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, surpassing the 6.7 percent gain for German bunds and 8 percent return for U.S. Treasuries. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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