The euro fell versus a majority of its 16 most-traded counterparts amid speculation a Greek austerity plan and a European Union pledge to stabilize the region’s economy won’t resolve its sovereign-debt crisis. The 17-nation currency declined as a lawmaker from Greece’s ruling Pasok party said he hasn’t decided to vote for the country’s new austerity package and Italian bank stocks slumped amid concern the debt crisis may spread. South Africa’s rand tumbled on the crisis in the euro region, the nation’s largest trading partner. Australia’s dollar jumped as a central bank official said inflation may quicken. “Greece concerns and Italian banks are what the market is focusing on,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto. “Everyone is just reacting to headlines. News from Europe will outweigh any economic data that comes out in the next few weeks.” The euro dropped 0.8 percent to 113.90 yen at 10:50 a.m. in New York, from 114.78 yen yesterday. It fell 0.7 percent to 1.1874 Swiss francs, after reaching a record-low 1.1846 yesterday. The euro weakened 0.6 percent to $1.4167, from $1.4256. The dollar depreciated 0.1 percent to 80.40 yen, from 80.51 yen. South Africa’s currency fell 0.9 percent to 6.8983 per dollar, from 6.8358, bringing its weekly decline to 2 percent. It dropped 0.3 percent to 9.7793 per euro, from 9.7477. The euro region accounts for 45 percent of South Africa’s exports and 34 percent of its imports, government data show. The rand closely tracks the euro, with a correlation of 0.683 this quarter. A value of 1 would mean they moved in lock step. Italian Banks The shared currency weakened as Italy’s two largest banks, UniCredit SpA and Intesa Sanpaolo SpA, led a drop in bank stocks in Milan. Trading in both firms’ shares was briefly suspended after breaching limits on intraday swings. Moody’s Investors Service said yesterday it may downgrade 13 Italian banks because they would be vulnerable to a cut in the government’s credit rating. The firm said last week Italy’s ratings may be cut because of slowing economic growth and the potential for Europe’s debt crisis to drive up borrowing costs. Italian 10-year bonds fell, increasing the additional yield investors demand to hold the securities instead of benchmark German bunds to the most since the euro was introduced in 1999. EU leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou, who won a confidence vote this week, pushes through a package of budget cuts and asset sales. Focus on Euro “There’s nothing going on but euro today,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group LLC in Greenwich, Connecticut. “Everybody seems to know what’s expected over the next few days; the difficulty is achieving it. The passage of the confidence vote was pretty slim, and all of Papandreou’s party members backed it, but you can’t assume the same will happen now.” Greek lawmakers must approve the 78 billion-euro ($111 billion) austerity package in a vote next week to receive a fifth loan payment under an existing bailout and future financing. Papandreou won a confidence vote by 155-143 this week. Failure to secure aid would push Greece to the brink of default, with the country needing the funds to cover 6.6 billion euros of maturing bonds in August. Thomas Robopoulos, a lawmaker for Greece’s ruling Pasok party, said he hasn’t decided whether he will vote for the government’s medium-term fiscal plan and implementation law in Parliament next week. He said by telephone today he’s leaning toward voting against it. European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. Sell-Euro Recommendation Morgan Stanley strategists advised selling the euro against the dollar, betting it will weaken to $1.36. “Despite the progress currently being made regarding providing aid packages to Greece, many hurdles still remain,” a team led by Hans Redeker, head of foreign-exchange strategy, wrote in an e-mailed report. The euro earlier rose after the Ifo institute said its business climate index for June, based on a survey of 7,000 executives, increased to 114.5 in June from 114.2 in May. The 17-nation currency headed for its third weekly decline against the dollar, the longest losing streak since February. It fell for a third week against the yen. Australia’s dollar gained against most major peers after Reserve Bank of Australia Assistant Governor Philip Lowe said that the nation’s biggest mining boom in a century risks accelerating inflation. ‘Significant Boom’ “We are looking at a significant boom in investment in the resources sector at a time when the overall economy has relatively little spare capacity,” Lowe said in a speech at a BankSA Trends forum in Adelaide, Australia. He didn’t specifically address monetary policy. RBA Governor Glenn Stevens held the benchmark rate at 4.75 percent this month for a sixth straight meeting. The Aussie gained 0.6 percent to A$1.3468 per euro, from A$1.3548 yesterday. It rose 0.1 percent to $1.0530, from $1.0523, while slipping 0.1 percent against the yen to 84.61. To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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