The Bundesbank yesterday called for an end to the downward drift of the euro in a bid to prevent the currency sliding towards parity with the dollar.

Mr Hans Tietmeyer, Bundesbank president, said he would "not be happy" if the euro fell further.

Mr Ernst Welteke, his designated successor and a member of the Bundesbank's council, said the drift towards a one-to-one value against the dollar "had to stop".

Their remarks contrasted with the half-hearted expressions of euro support offered by other European Central Bank officials, and came at the end of a disastrous week for Europe's single currency.

The euro finished European trading at $1.046 yesterday, a cent and a half lower than at the beginning of the week. Since its inception on January 1st, the euro has fallen by more than 11 per cent against the dollar.

On Thursday, Mr Eddie George, governor of the Bank of the England, told a House of Commons committee that sterling's entry into the euro required "an act of faith".

The latest bout of euro weakness was sparked earlier this week by market concerns about budget deficit concessions made to Italy. The deal agreed among European Union finance ministers in Brussels raised fears that fiscal discipline could weaken throughout the euro zone.

But the new currency has also been hurt by anemic growth in the 11-member euro zone, relatively low interest rates, and a lack of confidence in the newly-established European Central Bank's ability to speak with one voice, analysts said.

"People are not speculating against the euro," said one London-based investment banker, "they are just giving up the fight and selling. The feeling is that the downward drift will continue."

Mr Tietmeyer said yesterday that although the ECB did not have an exchange rate target, there "should not be an attitude of neglect to the euro".

His comments provoked a small rally in the currency, pushing it half a cent higher against the dollar. But it lost those gains after the currency markets became sceptical about whether his comments represented the views of the ECB as a whole.

"Until European monetary officials learn to sing from the same hymn sheet, contrasting statements should continue to weigh on the euro," said Mr Kit Juckes, chief strategist at NatWest GFM in London.

Mr Mark Cliffe, chief economist at ING Barings, the Dutch bank, said: "This (the Bundesbank's remarks) should be seen as an attempt to forestall a market assault on parity."

Meanwhile, the financial markets marked down the chances of British interest rates falling towards European levels, following Mr George's admission about sterling.