Euro dives on Italy fears

NEW YORK: The euro fell against the dollar on Monday amid fears that Europe's debt crisis was spreading to Italy, at one point dropping below the psychologically important $1.40 mark.

The dollar was trading for $1.4029 against the euro in New York at 2100 GMT on Monday, compared to $1.4258 at the same time Friday.

Meanwhile the dollar fell against the Japanese currency, weakening to 80.24 yen from 80.55 on Friday.

Europe's common currency was battered by signs that Italy -- the eurozone's third-largest economy -- could be heading into a Greek-style debt crisis, as the Italian stock market tumbled and government bond yields spiked.

Eurozone financial ministers met in Brussels to discuss a new rescue package for Greece, even as fears mounted that Italy or Spain were next.

The yields on Italian 10-year government bonds soared Monday to 5.67 percent, while Spanish debt climbed to nearly 6 percent.

"The single currency has been absolutely battered today as European leaders struggle to stem the loss of confidence that they will be able to come up with a solution to the current sovereign debt crisis," said Michael Hewson, an analyst with CMC Markets in London.

The dollar fell against the Swiss franc, trading for 0.8355 francs on Monday compared to 0.8368 on Friday.

It gained against the British pound, trading for $1.5905 against the pound from $1.6048 on Friday.

Copyright AFP (Agence France-Presse), 2011