The Australian and New Zealand dollars halted one-day gains from yesterday as concern that fiscal turmoil in Europe is hurting the region’s economic growth curbed demand for higher-yielding assets. The so-called Aussie weakened versus most of its 16 major counterparts before reports this week that may show confidence remained weak and the jobless rate rose across the 17 nations that share the euro. Australia’s dollar declined even after figures today showed new home sales in the nation climbed last month. New Zealand’s currency fell against its U.S. and Japanese peers after yield premiums on Spain’s debt over Germany’s surged to a 17-year high. “The uncertainty in Europe and the unknown of how governments are going to fund the recapitalization of banks are impacting the Aussie again today,� said Greg Gibbs, a foreign- exchange strategist at Royal Bank of Scotland Group Plc in Sydney. “It’s pretty clear that several periphery countries are under a lot of stress already.� Australia’s dollar lost 0.3 percent to 98.27 U.S. cents as of 11:31 a.m. in Sydney after rising 1 percent yesterday, its biggest one-day gain since April 12. The Aussie fell 0.2 percent to 78.13 yen. New Zealand’s currency, often called the kiwi, declined 0.3 percent to 75.98 cents after advancing 1.1 percent yesterday. It slid 0.2 percent to 60.43 yen. The kiwi has dropped 7.1 percent versus the dollar since April 30, the worst performance among the U.S. currency’s 16 most-traded counterparts, according to data compiled by Bloomberg. The Aussie has fallen 5.7 percent. Bonds Rise Australia’s bonds rose, pushing 10-year yields down six basis points, or 0.06 percentage point, to 3.12 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, lost two basis points to 2.46 percent. Consumer confidence in the euro area was at minus 19.3 in May, from minus 19.9 in April, according to a Bloomberg News survey before the final reading is released tomorrow. The jobless rate climbed to 11 percent in April, the highest in data compiled by Bloomberg going back to 1990, economists forecast in a separate survey before the June 1 report. The extra yield investors demand to hold Spain’s 10-year bonds instead of similar-maturity German notes soared to 5.12 percentage points yesterday, the most since 1995, according to data compiled by Bloomberg. In Australia, a private report by the Housing Industry Association showed sales of newly built homes rose 6.9 percent last month to 5,816, the biggest increase in more than two years. That compares with a 9.4 percent drop to a record low in March, according to the data. Australia’s dollar has declined 2.1 percent this year, the second-worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. Its New Zealand counterpart dropped 0.5 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 at greynolds1@bloomberg.net

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