May 7 (Bloomberg) -- The euro weakened to a more than three-month low after Francois Hollande was elected president of France and as Greek voters flocked to anti-bailout parties, stoking concern austerity efforts in Europe may be derailed. The 17-nation currency slid for a sixth day, its longest series of declines since September, dropping as much as 1 percent before paring losses. Hollande, who becomes the first Socialist in 17 years to control Europe's second-biggest economy, pledged to push for less austerity and more growth in the region. The yen and the dollar pared gains against higher- yielding currencies as safety demand weakened. "It's a pretty big deal for France and it's something that's going to hang over the euro and prevent it from seeing any material recovery over the course of this week," said Kathy Lien, director of currency research with online-trading firm GFT Forex in New York. "For the European Central Bank, this is going to be yet another reason for them to consider their lack of dovishness." The euro declined to $1.2955, the weakest since Jan. 25, before trading 0.3 percent lower at $1.3042 at 10:42 a.m. New York time. It dropped 0.3 percent to 104.18 yen. The U.S. dollar was little changed at 79.86 yen. The pound led gains among the most-traded currencies, rising 0.2 percent. France, Germany Hollande's platform calls for policies German Chancellor Angela Merkel opposes, including increased spending and delayed deficit cuts. He used his campaign to call for an activist European Central Bank, defying Germany. Merkel telephoned Hollande to congratulate him and to invite him for talks in Berlin "as soon as possible," according to a statement from her government. Greek elections left the two biggest parties short of the clear majority to keep bailout efforts on track. With the nation dependent on rescue funds to stay in the euro, the next government will need to find cuts worth 5.5 percent of gross domestic product in 2013 and 2014. "The elections have created a lot of political uncertainty," said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. "There's a clear risk that if we get a lot of stimulus measures that have to be paid for then euro-dollar will go lower." Measures aimed at stemming Europe's sovereign-debt crisis have driven economies from the Netherlands to Spain back into recession, emboldening politicians campaigning for growth. 'Element of Caution' The ECB kept its main refinancing rate at 1 percent after a meeting last week. While it still expects a gradual economic recovery this year, the outlook has become "more uncertain," President Mario Draghi said. "The election results in France aren't unexpected, but they certainly put that element of caution into the market because of Hollande winning and some of the principles he stands for," said Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York. "The euro being down there around $1.30 and trading below it today is certainly reflective of the caution and the unease that the market has at the moment." The euro has declined 0.3 percent over the past month, according to Bloomberg Correlation-Weighted Indexes tracking 10 developed-nation currencies. The dollar has risen 0.3 percent and the yen has advanced 2.9 percent, the indexes show. The common currency would have to close "firmly below" the $1.30 level in order to spur a drop to $1.2625 and $1.2450, Skandinaviska Enskilda Banken AG strategists Anders Soderberg and Dag Muller wrote in a research note today. --With assistance from Masaki Kondo in Singapore. Editors: Kenneth Pringle, Greg Storey To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Emma Charlton in London at echarlton1@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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