Dec. 14 (Bloomberg) -- The euro fell toward an 11-month low against the dollar as Italy and Germany prepared to auction notes today amid speculation the region's sovereign-debt crisis is far from resolved. The 17-nation currency weakened versus all but one of its 16 major counterparts before a European report forecast to show industrial production stalled in October. The yen rose for a third day versus the euro as Asian and European stocks declined, boosting demand for safer assets. The Dollar Index rose after the Federal Reserve said yesterday the U.S. economy is maintaining its expansion and refrained from taking new action to lower borrowing costs. "It's hard to see a positive scenario for the euro," said Kumiko Gervaise, an analyst in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan's largest online currency margin-trading company. "A bad result at debt auctions will be a selling catalyst for the euro." The euro dropped 0.2 percent to $1.3015 at 8:14 a.m. in London after declining to $1.3005, the weakest level since Jan. 12. The single currency dropped 0.2 percent to 101.53 yen after sliding to 101.44, the lowest since Oct. 4. The dollar was little changed at 77.99 yen. The MSCI Asia Pacific Index of shares fell 0.6 percent and the Stoxx Europe 600 Index declined 0.2 percent. Italy is scheduled to auction as much as 3 billion euros of debt maturing in 2016 today, while Germany plans to sell 5 billion euros of two-year notes. Spain will offer debt maturing in 2016, 2020, and 2021 tomorrow. The euro weakened yesterday as German Chancellor Angela Merkel rejected increasing the upper limit of funding for Europe's permanent bailout mechanism. Merkel told coalition lawmakers the 500 billion-euro cap on Europe's planned permanent fund will stay in place, two officials with knowledge of the discussion said. The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six major trading partners, rose 0.1 percent to 80.325. --With assistance from Hiroko Komiya and Mariko Ishikawa in Tokyo and Fion Li in Hong Kong. Editors: Nicholas Reynolds, James Kraus To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net

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