The pound fell to a five-week low against the euro as speculation European policy makers are taking steps to stem the region’s debt crisis damped demand for the relative safety of U.K. assets. Sterling headed for a fourth monthly decline versus the euro as former European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo said Spain may escape a bailout as the country has continued to raise its own financing this year. The pound rose to a four-week high against the dollar after U.K. consumer confidence unexpectedly increased in November. Gilts were little changed. “The euro has had the upper hand this week thanks to improving sentiment,� said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “Against the dollar, sterling looks firmer, so it’s not all doom and gloom for the pound.� The U.K. currency dropped 0.2 percent to 81.08 pence per euro at 9:03 a.m. London time after falling to 81.15 pence, the weakest level since Oct. 24. The pound was little changed at $1.6046 after climbing to $1.6062, the strongest since Nov. 2. Spain’s 10-year bond yield dropped to the lowest level in eight months yesterday, while similar-maturity Italian yields declined to the least in two years. “It is by no means excluded that a bailout will not be requested, if a sequence of good news is produced in terms of the deficit and other things,� Gonzalez-Paramo said in an interview with Bloomberg Television in London yesterday. Consumer Confidence An index of U.K. sentiment improved to minus 22 this month, the highest reading since May 2011, from minus 30 in October, GfK NOP Ltd. said in an e-mailed report. The median of 23 estimates in a Bloomberg survey was for an unchanged reading. Sterling has gained 1.3 percent this year, according to Bloomberg Correlation-Weighted Indexes which track 10 developed- market currencies. The euro declined 1.8 percent and the dollar fell 2.3 percent. The yield on the 10-year gilt was at 1.75 percent after dropping to 1.747 percent, the lowest since Nov. 19. The 1.75 percent bond due in September 2022 traded at 99.965. Gilts returned 3.5 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 3.8 percent and U.S. Treasuries earned 2.7 percent. To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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