The pound fell against the euro for the third time in the past four days as mounting speculation that Ireland will receive financial aid damped demand for the U.K. currency as a haven. Gilts rose as stocks declined. Sterling headed for its first weekly decline against the common currency in four weeks. Officials from the European Union and the International Monetary Fund are in Dublin to assess Irish banks. Finance Minister Brian Lenihan said yesterday his government would welcome “substantial contingency capital funding,” opening the door to loans the central bank said may be worth “tens of billions” of euros. “The market is starting to feel that Ireland is probably a done deal, although technically it’s not at all,” said Jane Foley, a senior currency strategist at Rabobank International in London. “The euro is a little bit better bid, so sterling is therefore on the back foot relative to that.” The pound depreciated 0.6 percent to 85.52 pence per euro at 2:53 p.m. in London, leaving it 0.6 percent weaker since Nov. 12. The U.K. currency fell 0.5 percent to $1.5958, set for its second straight weekly drop. The pound has declined 3.3 percent against a basket of its developed-country peers this year, according to Bloomberg Correlation-Weighted Currency Indexes, making it the third- worst-performing currency, after the euro and Norwegian krone. Accord ‘Very Likely’ Irish Defense Minister Tony Killeen said some aid could be drawn down “quickly” after any loan agreement with the European Union and the International Monetary Fund is agreed. Speaking on RTE radio in Dublin today, he said Ireland is taking the only option available to it. He said it’s “very likely” the country will reach an accord. Sterling also depreciated as the People’s Bank of China ordered banks to set aside larger reserves for the second time in two weeks, aiming to limit inflation and asset-bubble risks. The ratio will increase 50 basis points starting Nov. 29. The yield on the 10-year gilt slipped one basis point to 3.40 percent, with the two-year note yield three basis points lower at 1.10 percent. The FTSE 100 Index of stocks declined 1.1 percent, poised for a drop in the five days. Britain’s Treasury sold 3 billion pounds of 28, 91 and 182- day bills today, according to the U.K. Debt Management Office. Gilts have returned 6.3 percent this year, compared with a 6.8 percent gain for German bonds and a 7.3 percent increase for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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