The euro slipped against the majority of its most-traded peers on speculation European leaders are slowing the drive to grant Greece additional aid, fueling concern the nation may be forced to restructure its debt. The pound surged as the Bank of England said U.K. inflation may reach 5 percent this year. German Chancellor Angela Merkel yesterday said Greece needs to stay the course on budget cuts to deserve an extension of the 110 billion-euro ($158 billion) lifeline granted last year. South Korea’s won surged after a report showed unemployment fell to a three-month low. “It’s clear that the euro is a laggard now,” said Daragh Maher, deputy head of global foreign exchange at Credit Agricole SA. “The uncertainty, the risk that we get another lurch lower, is the concern.” The euro slipped to $1.4389 at 6.41 a.m. in New York from $1.4409 yesterday. It fell as much as 0.5 percent against the Japanese currency, before trading at 116.52 yen. The dollar was little changed at 80.97 yen. A new aid package would feature a rate reduction for Greek loans and an extension of debt maturities, plus extra funds to spare Greece from going to the markets, two officials involved in the talks said under condition of anonymity. Greek, Portuguese Aid “We can offer solidarity only if Greece’s stability and eagerness to reform is proven,” Merkel told reporters in Berlin yesterday. “We can get out of this difficult situation only if we properly rebuild that foundation, not just help without Greece doing anything.” The Greek two-year note yield advanced to a record as unions held their second general walkout this year, grounding flights and shutting hospitals and schools in protest against deficit reductions. Finland may insist Portugal’s rescue includes terms that force investors to share losses, Kimmo Sasi, who heads the Finnish parliament’s working group on bailout talks, said in an interview. Portugal became the third euro member to get aid as Europe’s sovereign-debt crisis spread beyond Greece and Ireland. The euro has gained 2.4 percent this year in a measure of the currencies of 10 developed nations, according to Bloomberg Correlation-Weighted Currency Indexes. The yen has lost 5.3 percent, while the dollar is down 5.5 percent. The common currency has dropped 2.4 percent against the weighted basket since May 5, when European Central Bank President Jean-Claude Trichet signaled the bank may wait until after June to raise interest rates again. U.K. Inflation Report “When the ECB was tightening and that’s all that we were thinking about, the currency market was happy to ignore everything else,” Maher said in a phone interview. “Now the market is greedy for them to accelerate that and they haven’t, so it’s enabled some of these peripheral stories to gain some more traction in the market.” The pound strengthened to a one-month high versus the euro after the Bank of England said the outlook for growth has deteriorated in the past three months and that it sees inflation “markedly higher” in the near term. Sterling climbed 0.8 percent to $1.6490. The British currency surged 0.9 percent to 87.24 pence per euro, near the strongest since April 5. It rose 0.8 percent to 133.48 yen. South Korea’s won surged 0.8 percent to 1,074.95 as the nation’s jobless rate fell to a three-month low of 3.6 percent in April from 4 percent in March, according to Statistics Korea. The median estimate in a Bloomberg survey of 12 economists was for a rate of 3.8 percent. 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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