Forexpros - The U.S. dollar extended gains against its major counterparts on Tuesday, following remarks by Spanish Treasury Minister Cristobal Montoro, while markets awaited the outcome of talks between finance ministers from the Group of Seven nations. During European afternoon trade, the dollar was higher against the euro, with EUR/USD falling 0.60% to hit 1.2425. The euro weakened broadly after Spain’s treasury minister said that financial markets were effectively closed to Spain because of the current high level of the country’s borrowing costs. Meanwhile, a raft of weak euro zone data underlined concerns over the ongoing deterioration in the region’s economy. Revised data showed that the euro zone's services sector contracted at a slightly slower rate than initially expected in May, but still shrank at the fastest pace since June 2009. In Germany, official data showed that factory orders dropped 1.9% in April, compared to expectations for a 1% decline, fanning concerns over the impact of the ongoing sovereign debt crisis on the region’s largest economy. Another report showed that euro zone retail sales dropped 1% in April, disappointing expectations for a more modest 0.1% decline. The greenback was also higher against the pound, with GBP/USD shedding 0.23% to hit 1.5346. Elsewhere, the greenback slipped lower against the yen but pushed higher against the Swiss franc, with USD/JPY sliding 0.12% to hit 78.24 and USD/CHF rising 0.60% to hit 0.9667. The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD edging up 0.12% to hit 1.0405, AUD/USD dipping 0.01% to hit 0.9726 and NZD/USD shedding 0.43% to hit 0.7531. Earlier in the day, the Reserve Bank of Australia lowered its benchmark interest rate by 0.25% to 3.50%, the lowest level since October 2009, saying that recent indicators suggested "further weakening in Europe and some further moderation in growth in China". The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.40%, to trade at 82.98. Later in the day, the U.S. Institute for Supply Management was to release a report on non-manufacturing activity.

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