The euro snapped a three-day decline against the dollar after Spain sold more than its maximum target at a debt auction today, easing concern the region’s debt crisis is worsening. The 17-nation currency pared losses versus the yen after a report showed European manufacturing and service industries contracted less this month than economists forecast. The Swiss franc strengthened against all its major counterparts after the central bank refrained from introducing new measures to weaken the currency at a policy meeting today. “We had reasonable auction results from Spain, where they sold a lot more paper than expected,� said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London. “We had better-than-expected PMI data, which gave the euro a relief bid earlier.� The euro gained 0.4 percent to $1.3029 at 8:32 a.m. in New York after weakening to $1.2946 yesterday, the lowest level since Jan. 11. The European currency was little changed at 101.32 yen after falling 0.3 percent to 101.05 yen, the weakest since Oct. 4. The yen strengthened 0.4 percent to 77.77 per dollar. Spain sold 6.03 billion euros of bonds today, compared with the maximum target of 3.5 billion euros the Treasury set for the auction. The yield on the security due in April 2021, which acts as the 10-year benchmark, was 5.545 percent, compared with 5.433 percent when it was last auctioned on Oct. 20. The nation also sold debt due in 2016 and 2020. Technical Indicator The euro rallied after the currency’s 14-day relative strength index against the dollar fell to 29 yesterday, below the 30-level that some traders see as a sign a currency may be poised to reverse direction. “A little bit of less-bad news and technical factors are pushing the euro higher,� said Geoffrey Yu, a currency strategist at UBS AG in London. The euro also gained earlier after London-based Markit Economics said its euro-area composite index based on a survey of purchasing managers in both industries rose to 47.9 from 47 in November. Economists forecast a drop to 46.5, according to a Bloomberg News survey. A reading below 50 indicates contraction. The franc gained the most in eight weeks against the euro after Switzerland’s central bank left its limit on the currency unchanged, resisting pressure from exporters to further curb its strength as officials take time to assess deflation risks. The Swiss National Bank kept the franc’s minimum exchange rate at 1.20 per euro, in line with the forecasts of nine out of 13 economists in a Bloomberg News survey. The central bank also maintained its benchmark interest rate at zero. ‘Problematic Euro’ “There had been a growing sense that the SNB may well decide not to lift the ceiling, in part because of the problematic euro,� said Michael Derks, a market strategist at FXPro Financial Services Ltd. in London. The franc is unlikely to strengthen further because “the dollar is the preferred safe-haven currency at present.� The franc appreciated 1 percent to 1.2258 per euro after rising as much as 1 percent, the biggest gain since Oct. 20. The currency rose 1.3 percent to 94.09 centimes per dollar. Gains in the euro were capped today as speculation European leaders aren’t doing enough to resolve the debt crisis damped demand for the region’s currency. “The situation in Europe is a worry on the financial side as well as the economic side,� said Derek Mumford, a Sydney- based director at Rochford Capital, a currency-risk management firm. “The U.S. dollar is still the currency to go to as far as a safe haven.� The euro has weakened 1.7 percent in the past month according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar has gained 2.6 percent and the yen has advanced 1.6 percent. To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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