The euro slipped to an 11-year low against the yen, before paring declines, on concern that the European debt crisis will hamper economic growth and destabilize financial markets as 2012 begins. The single currency weakened against the dollar before a report that economists said will affirm European manufacturing shrank for a fifth straight month. German Chancellor Angela Merkel said in a New Year’s speech she expects turbulence this year and will do “everything� to save the euro and end the region’s debt crisis. “We remain negative about the euro,� said Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva. “Lack of growth will be a major issue there this year, and I don’t think what leaders have proposed will be enough to ring-fence the economic problem. Concern about debt sustainability in peripheral countries will escalate.� The euro fell to as low as 98.66 yen, the least since December 2000, before trading little changed at 99.61 yen at 8:47 a.m. London time. It weakened 0.1 percent to $1.2945. The 17-nation currency depreciated the most against the Canadian dollar, slipping 0.3 percent. The euro posted its first back-to-back annual declines against the dollar in a decade last year. It was also the worst performer among 10 developed-nation currencies in 2011, sliding 2.1 percent, according to Bloomberg Correlation-Weighted Indexes. European leaders have pledged to draft a stricter rulebook for controlling government spending for the more than two-year- old debt crisis. Merkel and French President Nicolas Sarkozy will meet in Berlin on Jan. 9 to work out details. A gauge of euro-region manufacturing was 46.9 in December versus 46.4 in the previous month, according to a median estimate of 26 economists in a Bloomberg News survey. A reading below 50 indicates contraction. To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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