Euro Falls Below $1.30 as Italy Yields Rise

The euro fell below $1.30 for the first time since January as signs of increased funding stress in Europe damped investor appetite for the shared currency.

The 17-nation euro declined to a 10-week low against the yen as Italian borrowing costs increased at a debt auction and Spanish banks’ borrowings from the European Central Bank climbed by the most in a year. Norway’s krone weakened after the Norges Bank cut interest rates for the first time since 2009. The pound was the biggest gainer against the euro among the major currencies as investors sought protection from the crisis.

“There is a major funding issue,” Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc., said today in a “Bloomberg on the Economy” radio interview with Sara Eisen. “The few measures that were taken on the fiscal side were very long-term measures that really didn’t provide any comfort for the short-term liquidity issue. That’s why the news has seen the euro significantly lower.”

The euro slipped 0.5 percent to $1.2972 at 11:56 a.m. New York time, after depreciating to $1.2946, the weakest level since Jan. 11. The shared currency dropped 0.4 percent to 101.32 yen after sliding to 101.10, the lowest since Oct. 4. The dollar rose 0.1 percent to 78.08 yen.

The Standard & Poor’s 500 Index (SPX) fell 1.2 percent and the Thomson Reuters/Jefferies CRB Index of raw materials slid 3 percent.