Dec. 16 (Bloomberg) -- The dollar remained lower against the euro and yen after U.S. housing starts rose last month from a low level and jobless claims declined, showing the U.S. economy seeking to gain momentum. The 16-nation euro appreciated against the greenback for the first time in three days as European Union leaders start a two-day summit in Brussels with the focus on a permanent crisis- fighting system. The Swiss franc declined after the nation’s central bank kept interest rates on hold. Brazil’s real surged against its most traded counterparts as the government tries to stimulate the corporate debt market. “The market hasn’t reacted to the housing data unless it’s been really weak or strong and it’s just stabilizing,” said Mary Nicola, a New York-based currency strategist at BNP Paribas SA. “We saw a significant plunge, but now it’s just stabilizing, so we haven’t seen a move in the currencies.” The dollar fell 0.2 percent to $1.3239 per euro at 8:53 a.m. in New York, from $1.3214 yesterday. The dollar slipped 0.1 percent to 84.16 yen from 84.24 yen. The common currency rose 0.1 percent against the yen to 111.47. Builders in the U.S. began work on more homes in November for the first time in three months, showing the industry is struggling to recover. Home Report Housing starts rose to a 555,000 annual rate, up 3.9 percent from October’s 534,000 pace that was higher than initially estimated, Commerce Department figures showed today in Washington. The median estimate in a Bloomberg News survey called for a 550,000 pace. Building permits, a proxy of future work, fell, reflecting a drop in applications for multifamily projects. The ailing housing market is restraining employment and inflation as rents account for 40 percent of core consumer prices. The Federal Reserve cited the slump last month when it announced it would buy $600 billion in Treasuries to spur growth. Applications for jobless insurance payments decreased by 3,000 to 420,000, the lowest in three weeks, Labor Department figures showed today. Economists surveyed by Bloomberg News projected an increase in claims to 425,000, according to the median forecast EU leaders were close to agreeing on an amendment to the bloc’s Lisbon Treaty foreseeing a “mechanism to safeguard the stability of the euro area as a whole” with financial aid for distressed governments “subject to strict conditionality,” officials told reporters yesterday. Divided Opinion Divisions between leaders about action to stifle the debt crisis have helped push the euro 2.1 percent lower in the past month against the currencies of 10 developed nations tracked by Bloomberg Correlation-Weighted Indexes. “I don’t think the euro is going to be able to gain any sustained support from the meeting and it could be left disappointed if we are lacking any detail,” London-based strategist Ian Stannard said in an interview. Spain’s Treasury today sold 2.4 billion euros ($3.2 billion) of bonds, less than its maximum target. Borrowing costs surged after Moody’s Investors Service said it may downgrade the country’s credit rating. Moody’s yesterday said Spain’s credit rating may be cut from Aa1, citing “vulnerability to funding stress.” Spain has to raise 170 billion euros next year, while refinancing needs for its regions total 30 billion euros and for banks around 90 billion euros, Moody’s estimated. A bailout isn’t “likely,” it said. Swiss Rates The Swiss franc weakened against all its major counterparts after the nation’s central bank held the three-month Libor target rate at 0.25 percent, in line with the estimates of all 19 economists in a Bloomberg News survey. The franc’s strength against the euro, which hit a record high yesterday, has threatened the country’s export-led recovery. The franc was 0.4 percent weaker against the common currency at 1.2844, after strengthening yesterday to a euro-era record of 1.2759. It declined 0.2 percent versus the dollar to 97.03 centimes. Brazil will cut taxes and provide incentives to stimulate the domestic corporate debt market and supply longer-term credit for infrastructure investments needed to host the 2014 World Cup and 2016 Olympics. The tax on foreign capital inflows that was tripled this year will be reduced to its previous 2 percent for foreign-based private equity investors who want to finance Brazil’s infrastructure drive. Brazil Steps Finance Minister Guido Mantega said the state-run development bank known as BNDES will set aside 10 billion reais ($5.8 billion) to purchase longer-term debt issued by corporate borrowers. The move will help provide liquidity to the secondary market for the paper. Brazil’s currency rose against most of its most traded counterparts and strengthened 0.4 percent to 1.7022 per dollar. The New Zealand dollar touched a 10-year low against its Australian counterpart. The so-called kiwi dropped for a seventh day against the Aussie, the longest losing streak in 18 months, after industry reports showed the confidence of consumers and businesses in the smaller nation waned. New Zealand’s household sentiment index fell to 108.3 in the fourth quarter, the lowest since the second quarter of 2009, Westpac and McDermott Miller Ltd. said in a report today. A net 34.5 percent of companies expect sales and profits to rise during the next 12 months, down from 35.3 percent in November, according to a survey by ANZ National Bank Ltd. The kiwi touched a 10-year low against the Aussie after the Reserve Bank of Australia said in its quarterly bulletin that utility prices are likely to keep rising, underscoring forecasts that inflation will quicken. New Zealand’s dollar fell 0.5 percent to NZ$1.3408 versus Australia’s. --With assistance from Emma Monami Yui in Tokyo, Emma Charlton in London and Iuri Dantas in Brasilia. Editors: Paul Cox To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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