Euro sinks on poor eurozone growth data

NEW YORK - A fresh report showing the eurozone still mired ina pause in its downward slide.

The euro was flat in early Asian trade but slid immediately after EU data agency Eurostat reported the eurozone economy shrank 0.2 per cent in the January-March quarter, the sixth consecutive quarterly contraction.

At 2100 GMT, the euro bought US$1.2884 (S$1.61) down from 1.2924 late Tuesday. The common currency pulled off its day's low of US$1.2843 in afternoon US trade.

Meanwhile the dollar e recession sent the euro falling again Wednesday while the Japanese yen took dged slightly lower against the yen, to 102.23 yen (S$1.25) from 102.31, while the euro slipped to 131.72 yen from 132.23.

The first-quarter eurozone growth data was the key catalyst. The recession eased somewhat from the 0.6 per cent contraction of the final quarter of 2012.

But while core economy Germany clambered out of negative territory with 0.1 per cent growth, France fell back into recession, shrinking 0.2 per cent.

And both Italy and Spain posted 0.5 per cent first-quarter declines.

"Not a single aspect of any report - neither the quarterly nor the yearly readings - beat expectations," said Christopher Vecchio of DailyFX.

"The biggest disappointment, of course, has to be Germany, which saw the economy grow at 0.1 per cent quarter on quarter, but contract by 0.2 per cent year-on-year."

IG sales trader Yusuf Heusen that the eurozone data "was unsurprisingly weak, reminding us that while we are no longer expecting a Spanish or Italian bailout on a daily basis, the overall situation remains dire."

The pound recovered somewhat against the dollar after a steady fall, rising to US$1.5230 from US$1.5211.

The dollar eased against the Swiss franc, to 0.9647 franc (S$1.25) from 0.9664 franc.