By Inyoung Hwang Jan. 19 (Bloomberg) -- The euro fell to the lowest level in almost four weeks against the dollar as Germany’s investor confidence slid more than estimated and Europe’s finance chiefs said Greece may have to do more to contain its budget crisis. The dollar appreciated against most of its major counterparts as the outlook for Europe discouraged demand for higher-yielding assets. Sterling climbed to a four-month high versus the euro as the U.K.’s inflation rate jumped by the most since records began in 1997. “Perhaps the recovery in the euro zone is starting to run out of steam,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “We would be sellers of any rebound in the euro.” The euro slid 0.8 percent to $1.4269 at 11:31 a.m. in New York, from $1.4384 yesterday. It touched $1.4256, its weakest level since Dec. 23. The euro dropped 0.3 percent to 130.18 yen, from 130.58. Japan’s currency depreciated 0.5 percent to 91.24 per dollar, from 90.78. The 16-nation euro may extend its decline versus the dollar after falling below its 200-day moving average, according to Ronald Leven, a strategist at Morgan Stanley in New York. “The euro is testing very key technical levels,” Leven said. “We just broke the 200-day moving average, and if that holds into the close today, it’s going to encourage euro bears to be more aggressive.” Greece’s Crisis European finance chiefs said after a meeting in Brussels that Greece’s fiscal crisis is affecting other countries and called on the government to step up its budget-cutting efforts. Moody’s Investors Service’s current A2 rating on Greek bonds is justified by the government’s three-year plan to bring the European Union’s biggest budget deficit within EU limits, the company said in an e-mailed statement. Still, doubts on Greece’s “ability to implement the program” prompted Moody’s to leave its negative outlook on Greece, the company said. The euro weakened as the ZEW Center for European Economic Research said its German index of investor and analyst expectations, which aims to predict developments six months ahead, fell in January to 47.2 in its fourth consecutive drop. Economists expected the gauge would ease to 50, according to the median of 37 forecasts in a Bloomberg News survey. “Today’s downturn in the ZEW confidence measure has sealed the euro’s fate,” said Andrew Wilkinson, a senior market analyst at Interactive Brokers Group in Greenwich, Connecticut. “The euro’s being attacked from all sides.” Debt Risk Sovereign debt risk in the euro region may call the currency’s relevance as a reserve currency into question, according to Royal Bank of Scotland Group Plc. “The problems in Greece will be much harder for the market to gloss over this year, and there is not a solution which appears good for the euro,” Greg Gibbs, a foreign-exchange strategist in Sydney at RBS, wrote in a report dated yesterday. The dollar increased 0.9 percent to 5.7045 Norwegian kroner and advanced 0.3 percent to 92.32 U.S. cents versus the Australian currency on speculation investors will reduce carry trades, in which they buy higher-yielding assets with amounts borrowed in nations with low interest rates. The benchmark of zero to 0.25 percent in the U.S. has made the dollar popular for funding such transactions. The People’s Bank of China guided its benchmark one-year bill yield to the highest level in 14 months as it sought to curb record loan growth and prevent bubbles in the nation’s property and stock markets. Pound Versus Euro The pound appreciated as much as 1 percent to 87.15 pence versus the euro, the strongest level since Sept. 7. Sterling increased 0.2 percent to $1.6379 after reaching $1.6458, the strongest level since Dec. 8. Consumer prices in the U.K. climbed 2.9 percent in December from a year earlier, 1 percentage point more than in November, the biggest month-on-month increase since records began in 1997, data from Office for National Statistics in London showed. The Bank of England kept the benchmark interest rate at a record low of 0.5 percent. Governor Mervyn King will deliver a speech today in Exeter, England. “The high inflation is creating an impression the Bank of England is potentially going to move more quickly,” Leven said. “The market’s going to pay a lot of attention to King’s speech today. We’re starting to see more enthusiasm in the market to be long sterling.” The pound was buoyed after Cadbury Plc agreed to an improved 11.9 billion-pound ($19.7 billion) offer from Kraft Foods Inc. The revised bid is about 9 percent higher than Kraft’s previous proposal. To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net

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