Friday May 15, 12:31 PM
Euro drops as recession deepens across Germany
LONDON (AFP) - The euro dropped against leading currencies on Friday on data showing a deepening recession in Germany, Europe's biggest economy, while the picture was bleak across the entire continent.
The European single currency fell to 1.3576 dollars here from 1.3638 dollars late on Friday in New York.
Against the Japanese currency, the dollar eased to 95.17 yen from 95.20 yen late Thursday.
"The euro has weakened following the abysmal first quarter GDP report from Germany," said Lee Hardman, economist at The Bank of Tokyo-Mitsubishi UFJ in London.
"It has also prompted a sell off in risk assets boosting demand for safe-havens such as the yen driving the euro back below 130 yen.
"The initial market reaction underlines the fragility of recent gains in risk assets based on optimism that a recovery in global growth will occur in the second half of this year," added Hardman.
Recession has struck the German economy the biggest blow for 40 years, official data for the first quarter showed on Friday.
Germany, accounting for a third of eurozone output, contracted by 3.8 percent in the first three months compared to the final quarter of 2008, when it shrank 2.2 percent, the statistics office said.
France, Germany's main partner and the second-biggest eurozone economy, meanwhile entered official recession, with statistics showing output falling 1.2 percent after a 1.5-percent drop in the last quarter of 2008.
The French finance minister said this meant that the economy was set to shrink three percent this year, and figures out Friday in other European countries -- Austria, Italy, Hungary and Norway -- painted a similarly bleak picture.
Meanwhile a surprise jump in US jobless claims reported Thursday, after poor US retail sales data on Wednesday, dampened the outlook for recovery.
US jobless claims in the week to May 9 rose by 32,000 to 637,000, well above expectations for a final figure of 610,000, driven by lost employment in the struggling auto industry.
In London trade Friday, the euro was changing hands at 1.3576 dollars against 1.3638 dollars late on Thursday, at 129.12 yen (130.69), 0.8931 pounds (0.8955) and 1.5038 Swiss francs (1.5064).
The dollar stood at 95.17 yen (95.20) and 1.1084 Swiss francs (1.1063).
The pound was at 1.5191 dollars (1.5152).
On the London Bullion Market, the price of gold edged up to 925.83 dollars an ounce from 925.25 dollars an ounce late on Thursday.
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