The Australian dollar slid for the fourth time in five days as European leaders struggle to agree on measures to resolve the region’s debt crisis, curbing demand for higher-yielding assets. The so-called Aussie headed for a third weekly loss versus the yen before an Italian bill auction today. German Chancellor Angela Merkel again ruled out joint euro-area borrowing and an expanded role for the European Central Bank in stemming the crisis. New Zealand’s dollar was set for its longest losing streak versus the greenback in three years as Asian stocks fell. The nation holds general elections tomorrow. “There is some further downside risk in both equity markets and associated risk assets, such as the Aussie and kiwi,� said Thomas Averill, a director at the currency and interest-rate risk management company Rochford Capital in Sydney. There is “skepticism that is out there in the markets over Europe’s ability to solve this,� he said. The Australian dollar fell 0.4 percent to 96.98 U.S. cents as of 1:45 p.m. Sydney time. It bought 75.02 yen from 75.07 yen. New Zealand’s currency, nicknamed the kiwi, was at 74.19 U.S. cents from 74.16. It gained 0.3 percent to 57.38 yen. The Aussie and kiwi were set for a 3.1 percent slide and a 2 percent weekly drop against the dollar, respectively. Against the yen in the same period, Australia’s currency declined 2.5 percent and New Zealand’s dollar fell 1.4 percent. The MSCI Asia Pacific Index (MXAP) of shares lost 0.6 percent. The Australian currency may decline toward 95.5 cents, while its New Zealand counterpart may approach 73 cents in the coming weeks, Averill said. Italian Auction Italian two-year yields climbed to a 14-year high yesterday before the nation auctions 8 billion euros ($10.7 billion) of bills today and up to 750 million euros of bonds on Nov. 28. The nation’s 10-year bond yield rose 14 basis points to 7.11 percent yesterday. Greece, Ireland and Portugal sought international bailouts when yields passed 7 percent. Euro bonds are “not needed and not appropriate,� Merkel said yesterday at a press conference with Italian Prime Minister Mario Monti and French President Nicolas Sarkozy in Strasbourg, France. She said euro bonds would “level the difference� in euro-region interest rates. The kiwi dropped for a fourth week versus the dollar, set for the longest streak since August 2008, before the nation holds a general election tomorrow. “Expect a nervous start to trading next week if the result is not clear enough,� ANZ National Bank Ltd. said in a report. The New Zealand currency may range from 73.85 U.S. cents to 74.45, Interest Rate Strategist David Croy and Senior Dealer Alex Sinton wrote today. N.Z. Poll Support for the governing National Party fell to 49.5 percent in a Roy Morgan Research poll of 959 people taken from Nov. 22-24, down from 53 percent last week. Should the forecast prove accurate, Key would need backing from smaller parties to form a government. Reserve Bank of Australia Governor Glenn Stevens said yesterday the country’s economy is doing “OK� even as repercussions from “pretty serious� events in Europe can’t be ruled out. Financial conditions are tightening to some extent for trading countries because of Europe, he said at an Australian Business Economists dinner. He declined to comment on the future path of interest rates. Traders expect at least a 25-basis-point cut to the central bank’s key rate before the end of the year, cash-rate futures show. Australia’s benchmark 10-year yield was little changed at 3.86 percent, after falling yesterday to a record low of 3.806 percent. Yields on the nation’s 3-year debt lost two basis points, or 0.02 percentage point, to 3.03 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was at 2.65 percent from 2.66 percent yesterday, when it declined to a record 2.60 percent. To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net To contact the editor responsible for this story: Garfield Reynolds in Sydney at greynolds1@bloomber.net.

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