The euro dropped from almost a five-month high against the dollar as growth in Europe’s services and manufacturing industries slowed this month more than economists forecast. The 16-nation currency fell versus most of its major counterparts on concern the region’s recovery is losing momentum. The franc strengthened against the euro as a drop in stocks boosted demand for the Swiss currency as a haven. “The data has been on the soft side of expectations pretty much across the board, and that’s not helping,” said Adam Cole, London-based global head of currency strategy at Royal Bank of Canada’s RBC Capital Markets unit. “Longer-term, the dynamic is negative for the euro.” The euro fell 0.6 percent to $1.3328 at 7:32 a.m. in New York, from $1.3406 yesterday, when it advanced to $1.3440, the highest level since April 21. The euro depreciated 0.5 percent to 112.70 yen, from 113.27. The dollar traded at 84.53 yen, compared with 84.50 yen yesterday, when it dropped to 84.28, the lowest level since Japan’s intervention on Sept. 15. That day the yen reached a 15-year high. A composite index based on a survey of euro-area purchasing managers in both services and manufacturing fell to 53.8 from 56.2 in August, London-based Markit Economics said today. The median forecast of 15 economists in a Bloomberg News survey was for a reading of 55.7. A reading above 50 indicates expansion. The franc rose for the first time in three days against the euro, appreciating 0.5 percent to 1.3151. Falling Stocks European stocks erased earlier gains, leaving the benchmark Stoxx Europe 600 Index 0.5 percent weaker after rising as much as 0.7 percent. Standard & Poor’s 500 Index futures expiring in December dropped 0.7 percent. Sterling was little changed at $1.5682 after a report showed mortgage approvals in the U.K. fell in August to a 16- month low. The pound remained stronger versus the euro, trading at 85.06 pence. Home loans granted by lenders to buy properties dropped to 31,767 from a revised 34,219 in July, the London-based British Bankers’ Association said in an e-mailed statement today. The reading is down 22 percent from a year earlier. The pound may be the worst-performing currency of the Group of 10 nations through the end of next year as the government cuts spending and the central bank expands asset purchases, JPMorgan Chase & Co. said. “Aggressive fiscal tightening, along with household and bank deleveraging evident in a softening housing market and consumer demand, likely will compel the Bank of England to implement further quantitative easing,” JPMorgan strategists led by Gabriel de Kock in New York, wrote in an investor note dated yesterday. Pound Outlook Sterling may depreciate to 88 pence per euro by June and drop to $1.47 by the end of 2011, the analysts wrote. New Zealand’s dollar dropped for the first time in five days as a report showed the economy grew less in the second quarter than economists predicted. Gross domestic product expanded 0.2 percent from the prior three months, Statistics New Zealand said. The median forecast of 12 economists in a Bloomberg News survey was for an increase of 0.7 percent. New Zealand’s dollar slumped 1.5 percent to 72.75 U.S. cents and slid 1.6 percent to 61.42 yen. The U.S. currency was little changed versus the yen before an industry report forecast to show sales of existing homes were close to the weakest in 10 years. Sales of existing U.S. homes rose 7.1 percent in August to an annual rate of 4.1 million, behind only July’s 3.83 million pace as the weakest in a decade’s worth of data, according to median forecast of 72 economists in a Bloomberg News survey. The report from the National Association of Realtors is due at 10 a.m. New York time. “The data has been disappointing and the Fed will have to resort to quantitative easing,” said Neil Jones, head of European hedge fund sales at Mizuho Financial Group Inc. in London. “There’s momentum to sell the dollar.” To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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