Investing.com - The euro was steady against the U.S. dollar on Tuesday, but weakened against the pound and the yen, as broad concerns over the debt crisis in the euro zone continued to weigh on investor sentiment.
During European late morning trade, the euro edged lower against the U.S. dollar, with EUR/USD dipping 0.02% to trade at 1.2501.
The euro gave up small early gains against the greenback after Spain saw short-term borrowing costs double at an auction of government debt.
Spain’s Treasury auctioned slightly more that the targeted amount of EUR 3 billion, selling EUR1.6 billion worth of three-month government bonds at an average yield of 2.36%, up sharply from 0.84% at a similar auction last month.
Spain also sold EUR1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May.
Following the auction, the yield on Spanish 10-year bonds rose to 6.71%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
On Monday, rating’s agency Moody’s said that it had downgraded 28 Spanish banks, citing concerns over Madrid’s ability to support its banking sector, which the agency said was vulnerable to further losses from Spain's real-estate bust.
The announcement came after Spain’s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners.
Meanwhile, Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Sentiment on the euro also remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
The euro remained somewhat supported after a report showed that the forward looking Gfk index of German consumer climate eased up to 5.8 for July, confounding expectations for a decline to 5.6. The index posted a reading of 5.7 in June.
The single currency was down against the pound, with EUR/GBP shedding 0.47% to trade at 0.7990.
Sterling remained supported after Bank of England Governor Mervyn King said an interest rate cut would be less effective in stimulating the economy than more quantitative easing.
In testimony to Parliament's Treasury Committee, King said the outlook for the U.K. economy had deteriorated in recent weeks as a result of the ongoing debt crisis in the euro zone.
The comments came after official data showed that public sector net borrowing in the U.K. rose to GBP17.9 billion in May, up from GBP15.2 billion in the same month last year.
The single currency was also lower against the safe haven yen, with EUR/JPY losing 0.48% to trade at 99.13, but remained steady against the Swiss franc, with EUR/CHF unchanged on the day at 1.2009.
The euro was down against the Canadian, Australian and New Zealand dollars, with EUR/CAD losing 0.34% to hit 1.2823, EUR/AUD shedding 0.43% to hit 1.2437 and EUR/NZD dropping 0.57% to hit 1.5789.
Later Tuesday, finance ministers from Germany, France, Italy and Spain were to hold talks ahead of the EU summit on Thursday and Friday.
Elsewhere, the U.S. was to release industry data on house price inflation, as well as a report on consumer confidence.
During European late morning trade, the euro edged lower against the U.S. dollar, with EUR/USD dipping 0.02% to trade at 1.2501.
The euro gave up small early gains against the greenback after Spain saw short-term borrowing costs double at an auction of government debt.
Spain’s Treasury auctioned slightly more that the targeted amount of EUR 3 billion, selling EUR1.6 billion worth of three-month government bonds at an average yield of 2.36%, up sharply from 0.84% at a similar auction last month.
Spain also sold EUR1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May.
Following the auction, the yield on Spanish 10-year bonds rose to 6.71%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
On Monday, rating’s agency Moody’s said that it had downgraded 28 Spanish banks, citing concerns over Madrid’s ability to support its banking sector, which the agency said was vulnerable to further losses from Spain's real-estate bust.
The announcement came after Spain’s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners.
Meanwhile, Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Sentiment on the euro also remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
The euro remained somewhat supported after a report showed that the forward looking Gfk index of German consumer climate eased up to 5.8 for July, confounding expectations for a decline to 5.6. The index posted a reading of 5.7 in June.
The single currency was down against the pound, with EUR/GBP shedding 0.47% to trade at 0.7990.
Sterling remained supported after Bank of England Governor Mervyn King said an interest rate cut would be less effective in stimulating the economy than more quantitative easing.
In testimony to Parliament's Treasury Committee, King said the outlook for the U.K. economy had deteriorated in recent weeks as a result of the ongoing debt crisis in the euro zone.
The comments came after official data showed that public sector net borrowing in the U.K. rose to GBP17.9 billion in May, up from GBP15.2 billion in the same month last year.
The single currency was also lower against the safe haven yen, with EUR/JPY losing 0.48% to trade at 99.13, but remained steady against the Swiss franc, with EUR/CHF unchanged on the day at 1.2009.
The euro was down against the Canadian, Australian and New Zealand dollars, with EUR/CAD losing 0.34% to hit 1.2823, EUR/AUD shedding 0.43% to hit 1.2437 and EUR/NZD dropping 0.57% to hit 1.5789.
Later Tuesday, finance ministers from Germany, France, Italy and Spain were to hold talks ahead of the EU summit on Thursday and Friday.
Elsewhere, the U.S. was to release industry data on house price inflation, as well as a report on consumer confidence.