The euro weakened for a third day against the yen after a slide in Spanish industrial production added to concern the region’s debt crisis will worsen as economic growth stalls. Europe’s currency headed for its biggest weekly decline versus the dollar in six months as Spanish and Italian bonds slumped. The euro extended losses from yesterday when the European Central Bank cut its benchmark rate to a record. Gains in the dollar were tempered before a U.S. report forecast to show the nation is struggling to add jobs. Australia’s dollar and South Africa’s rand declined as stock losses damped demand for higher-yielding assets “The euro is down because we have seen rates crushed this week and they are going to stay low for a long time,� said Paul Robson, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “We fear the weak growth in Europe is structural. The U.S. payroll number will give quite a lot of guidance about market expectations about quantitative easing,� or bond purchases.. The euro fell 0.2 percent 98.88 yen at 6:36 a.m. in New York after dropping 1 percent yesterday. The 17-nation currency weakened 0.1 percent to $1.2377, having dropped 2.3 percent this week, the most since the period ended Dec. 16. The yen was little changed at 79.88 per dollar. Spanish Recession Spanish industrial production adjusted for the number of working days fell 6.1 percent from a year earlier, after an 8.3 percent decline in April, the National Statistics Institute said in Madrid. Spain’s recession probably intensified in the second quarter as Europe’s debt crisis worsened, the Bank of Spain said on June 27. Spanish bonds slid with the benchmark 10-year yield rising as high as 6.99 percent, the most since June 28. Italy’s 10-year yield increased six basis points to 6.04 percent. “Downside risks to the euro-area economic outlook have materialized,� ECB President Mario Draghi said yesterday after cutting the main refinancing rate by a quarter-percentage point to a record 0.75 percent and reducing interest on overnight deposits to zero. The euro has slumped 7.5 percent in the past year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar gained 8.3 percent, and the yen advanced 8.1 percent. ‘Look Dire’ “The economic fundamentals surrounding the euro area look dire,� said Takuya Kawabata, researcher at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency- margin company. “We can’t expect any economic indicators that can bolster the euro.� U.S. employers hired 100,000 workers last month after adding 69,000 in May, the least in a year, according to the median forecast of economists surveyed by Bloomberg News. Company headcounts excluding government agencies may have climbed by 106,000, concluding the smallest quarterly advance since the first three months of 2010. South Africa’s rand declined for a third day, sliding 1.1 percent to 8.2332 per dollar, and the so-called Aussie dropped 0.3 percent to $1.0258. The Stoxx Europe 600 Index of shares fell 0.3 percent, and futures on the Standard & Poor’s 500 Index slipped 0.2 percent. To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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