LONDON: The euro fell against the dollar and hit an 11-month low against the British pound on Monday after data showed euro zone growth was still vulnerable to downturns in countries like France and Spain.
The euro shed 0.5 percent to $1.3516, retreating from Friday's one-month high of $1.3622. It hit its lowest since early January against sterling of 82.53 pence per euro after UK manufacturing data bolstered expectations of a earlier than expected tightening by the Bank of England.
The eurozone manufacturing PMI rose to 51.6 last month from October's 51.3, just pipping an earlier flash reading of 51.5. But France's PMI sank to a five-month low of 48.4 from 49.1, while Spain's manufacturing sector shrank.
"The data highlights that the euro zone recovery is levelling off," said Alvin Tan, currency strategist at Societe Generale. "We would like to sell the euro against the dollar at rallies, but where we expect more action is the euro/sterling cross. We would add short euro positions against the pound."
The euro's losses saw the dollar index recover to trade 0.3 percent higher at 80.919. The dollar also rose to a more than six-month high against the yen of 102.895 yen.
The yen continued to struggle after falling more than 4 percent in November against the dollar and euro. Investors have been selling the low-yielding yen to buy riskier assets in carry trades made attractive by the Bank of Japan's ultra-loose monetary policy.
BOJ Governor Haruhiko Kuroda said on Monday that he would not hesitate to adjust policy, fanning speculation the bank could take more easing steps next year.
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