The euro fell for a second day after Moody’s Investors Service said France’s top credit rating is under pressure, adding to concern that European leaders will find it difficult to resolve the region’s debt crisis. The 17-nation currency extended losses as German investor confidence dropped to the lowest in almost three years and regional stocks slid before European officials gather for a summit on Oct. 23. The yen and dollar advanced as speculation Europe’s woes will slow global growth spurred investor appetite for safer assets. Malaysia’s ringgit led Asian currencies lower after a report showed China’s economic growth slowed. “Sovereign debt tensions in Europe are likely to remain high,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Hopes of an end to the sovereign debt crisis as soon as this weekend are unrealistic and that’s starting to weigh on the rebound that we saw last week in risk assets and the euro. We don’t think there’s an easy solution.” The euro weakened 0.3 percent to $1.3694 at 6:56 a.m. New York time, after sliding 1 percent yesterday. The currency weakened 0.5 percent to 104.99 yen, and declined 0.3 percent to 87.01 pence per pound. The yen appreciated 0.2 percent to 76.67 per dollar. France’s Aaa credit rating is under threat from worsening debt metrics and the potential for additional liabilities from the regional crisis, Moody’s said late yesterday. The nation’s financial strength has weakened because of the global financial crisis, making its debt measures the worst among its Aaa rated peers, Moody’s said. France Rating France’s 10-year bonds underperformed benchmark German bunds, widening the difference in yield between the securities to a euro-era record 107 basis points, or 1.07 percentage points. Bunds and Treasuries rose as investors sought shelter in the safest government debt. The euro extended its slide after the ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations declined to minus 48.3 in October from minus 43.3 in September. Economists expected a drop to minus 45, according to a Bloomberg News survey. The euro tumbled yesterday as German Chancellor Angela Merkel’s office knocked down what it called “dreams” that the Oct. 23 summit would resolve the debt crisis. Christian Noyer, head of France’s central bank, ruled out a ramping up of the European Central Bank’s bond-buying program to help shield countries like Italy and Spain from contagion. The pound fell against the dollar and the yen as U.K. stocks declined, even as a report showed the nation’s inflation accelerated to match a record high in September. Yen, Dollar The yen gained 0.7 percent and the dollar advanced 0.5 percent, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The Stoxx Europe 600 Index fell for a second day, losing 0.5 percent. “The two best safe-haven currencies in our view are the dollar and yen, so we’d expect those two to continue to outperform,” Hardman said. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, climbed 0.2 percent to 77.328. “Europe’s problems are going to take years to resolve, one meeting is not going to fix it,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s biggest lender. “Reality is setting in this week, and that’s going to see euro long positions being cut,” he said, referring to bets an asset will gain. The euro will likely decline toward $1.35 over the next two weeks, he said. ‘Years to Resolve’ Investors may seek to buy the euro against the yen as a momentum gauge signals the shared currency has dropped too quickly, according to Shinsei Bank Ltd. “The currency has been oversold over the long term, so the euro should find buyers on dips,” said Takako Masai, general manager of the markets sub-group at Shinsei Bank. The ringgit and Philippine peso weakened after China said gross domestic product growth slowed to 9.1 percent in the third quarter from a year earlier, after expanding 9.5 percent in the previous three months. “There’s been a setback in terms of the risk environment, mainly due to comments by Germany that dampen expectations of a grand plan,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “What’s important today is China’s GDP.” The Malaysian currency declined 1.1 percent to 3.1353 per dollar, and the peso weakened 0.6 percent to 43.288. To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net NI ASIAX NI AUB NI EXE NI FED NI FINMIN NI FRA NI FRX NI GEECO NI GRECO NI ITALY NI JAPAN NI MMK NI SPAIN NI GER NI EUROPE NI US

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