LONDON—The euro tumbled against most other major currencies Thursday, sinking to its lowest level against the dollar since September 2010 and to a fresh 11-year low against the yen, as fears about the health of the European banking system intensified and nerves set in ahead of a key French bond auction.
The euro sank by almost 0.7% to below $1.2848 while it also traded below ¥98.71. Concerns ahead of the French long-dated bond auction results due at around 0500 ET, traders placing negative euro bets against the dollar and clunky liquidity were all hitting the euro as well, said Michael Sneyd, a currency strategist at BNP Paribas in London.
Several London-based traders also pointed to unconfirmed chatter that a large German bank would need to raise capital as a reason for the common currency's weakness.
European equity bourses all sank into the red, with the declines led by banking stocks, while yields on indebted euro-zone countries' bonds rose and bund prices climbed into positive territory.
