Euro slips in Asia ahead of key EU summit

TOKYO—The euro weakened in Asia on Wednesday while the yen got a boost as traders moved into the safe haven owing to their low expectations for a European Union summit this week.

The common currency bought $1.2483 and 99.07 yen in Tokyo morning trade, down from $1.2495 and 99.36 yen in New York late Tuesday.

The dollar slipped to 79.37 yen from 79.51 yen.

EU leaders are to hold a two-day meeting in Brussels from Thursday to hash out proposed reforms for the region’s banking sector and region-wide rules on fiscal discipline.

The talks come as pressure increases on Europe to put its finances in order amid concerns that its debt crisis will lead to another global downturn.

Christopher Vecchio, currency analyst at DailyFX, said the latest meeting of European leaders was likely to disappoint with the euro likely to test $1.23 “should the eurozone summit yield little, as they have in the past”.

On Tuesday, Japan’s lower house passed a sales tax increase aimed at chopping the nation’s giant public debt, a move applauded by some as a positive step for the world’s third-largest economy.

Japan’s debt mountain stands at more than double gross domestic product, proportionately the world’s largest, but the planned tax rise also set off worries about the future of Japan’s government under Prime Minister Yoshihiko Noda.

Noda, who championed the move to double consumption tax to 10.0 percent by 2015, is facing a deep split in the ruling party over the issue, which has left his political future in doubt.

Opponents of the hike say any increase in household bills would derail the country’s uncertain economic recovery.