LONDON: The European single currency slumped to a new two-year low on Friday on heightened fears that Spain could be heading towards a bailout, analysts said.
In late afternoon deals, the euro dived to $1.2144, the lowest level since June 14, 2010. That compared with $1.2276 late in New York on Thursday.
"Spain is once again grabbing the headlines," said RIA Capital Markets analyst Nick Stamenkovic, citing mounting concern about the state of regional government finances.
"Ten-year Spanish yields (are) heading to an all-time high as investors fret Spain will need a sovereign bailout soon.
"Hence, the euro is under pressure amid the grim economic outlook," added Stamenkovic.
The yield on Spanish 10-year debt jumped above seven percent as eurozone finance ministers conferred by phone on aid to recapitalise Spanish banks.
The yield climbed to 7.065 percent from 6.969 percent at the close of trading on Thursday, the first time it has breached 7.0 percent since July 9.
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