Business

Euro drops below $1.31 for first time since January

Cashier counting euro notes
Image caption The euro has fallen against the dollar in 2011

The euro has dropped to an 11-month low against the dollar as concerns continue over the future of the eurozone.

The euro fell below $1.31 for the first time since January. Against the pound, one euro bought 84.20 pence.

Last week, 26 of the 27 members of the European Union backed new fiscal rules, with only the UK abstaining.

But many fear that the budget pact will still not be enough to prevent more countries from seeking a bailout.

Stocks were higher and remained so in the US, but turned lower in Germany and France towards the end of the day.

Jose Manuel Barroso, head of the European Commission, told the European Parliament the UK's stance had made compromise impossible at last week's EU summit on economic integration.

He said the "greatest" risk of the summit, a split between the 17 euro states and the other 10, had been avoided.

"This is not an agreement at 17-plus, but an agreement at 27-minus," Mr Barroso said.

Spain also managed to borrow 4.941bn euros of short-term debt at lower rates than recently.

But the president of the European Council, Herman Van Rompuy, said the new fiscal deal would not be signed by most EU states before March.

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