Euro falls on eurozone fears

WASHINGTON — The euro weakened Wednesday on eurozone fears and a disappointing Spanish bond auction that spurred concerns it may be the next domino to fall in the region’s debt crisis.

The euro was at $1.3141 around 2100 GMT, down from $1.3233 at the same time Tuesday. Earlier the euro hit $1.3107, its lowest level since March 16.

The euro weakened against the Japanese currency, falling to 108.35 yen from 109.55, as did the dollar, at 82.46 yen compared with 82.78 yen late Tuesday.

Traders were particularly unnerved by the poor bond auction from Spain.

Spain’s borrowing costs rose sharply Wednesday at its first debt sale since the government unveiled a tough austerity budget last week, a sign of fresh concerns over its ability to bring its strained finances under control.

Spain’s Treasury sold 2.59 billion euros ($3.408 billion) of bonds that mature in 2015, 2016 and 2020 and paid much higher rates.

“Spain is back in the eye of the storm,” said Soledad Pellon, analyst at IG Markets, adding the bond sale was an “absolute failure.”

Spain is racing to slash its public deficit to reassure markets that it will not follow Greece, Ireland and Portugal in needing an international bailout.

The dollar also continued to find support from minutes of the Federal Reserve’s policy meeting in mid-March, released Tuesday, that suggested the Fed was reluctant to inject more stimulus into the US economy.

Meanwhile, as expected, the European Central Bank left its key interest rate unchanged, at 1.0 percent, for the fifth straight month.

“Should key US data this week support the notion of ongoing strengthening in the economy, we see scope for the dollar to extend today’s gains,” said Vassili Serebriakov at Wells Fargo Bank.

The dollar firmed against the Swiss currency, to 0.9159 francs from 0.9096 francs late Tuesday.

The greenback also gained against the British pound, which fell to $1.5887 from $1.5914.