Euro gains on dollar, yen

The euro rose against the dollar and the yen today to pare the biggest weekly declines since October 2008, as the Group of Seven…

The euro rose against the dollar and the yen today to pare the biggest weekly declines since October 2008, as the Group of Seven nations prepared to discuss the Greek debt crisis and the German government voted on the bailout package.

The euro broke four days of losses versus the dollar after the Japanese Finance Minister Naoto Kan said European members will probably update the Group of Seven on Greece during a conference call today.

The pound tumbled to a 13-month low versus the dollar as the UK parliamentary election failed to produce an outright winner, fanning concern the next government will struggle to reduce the budget deficit.

The euro climbed 1.2 per cent to $1.2771 as of 7.12am in New York, paring its decline this week to 3.9 per cent, the biggest weekly drop since October 2008, the month following the collapse of Lehman Brothers. The 16-nation currency jumped 3.2 per cent to 118.12 yen, paring its drop in the five days to 5.7 per cent.

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The dollar advanced 2.1 percent to 92.49 yen. The pound declined 1 per cent to $1.4680, trading as low as $1.4476, the weakest level since April 2009.

Earlier, sterling fell to a 13-month low against the dollar and gilts dropped as the UK election failed to produce a clear winner, fueling concern that a new government won't be strong enough to tackle the budget deficit.

The currency fell for a sixth day as exit polls put David Cameron's Conservatives on course to win the most seats without gaining an overall majority.

Ten-year gilts ended five days of gains as Business Secretary Peter Mandelson said the sitting government should have the "first go" in trying to remain in power and Mr Cameron said the Labour Party had lost its "mandate to govern."

The Ftse 100 Index of stocks slumped 1.3 per cent.

The pound fell 0.9 per cent to $1.4706 as of 8.38am in London, after dropping to $1.4597, the lowest since April 2009. It lost 1.7 per cent to 86.53 pence per euro. The pound has declined 4.2 per cent this year, Bloomberg indexes show, amid concern a hung parliament would leave the nation with a government too weak to manage its £167 billion shortfall.

Britain's budget deficit is more than 11 percent of gross domestic product, the biggest in the Group of Seven nations.

In the first election since 1974 with no party gaining a majority, Mr Cameron's Conservatives had 285 seats in the 650-seat House of Commons with 600 results declared. Labour had 237 and Nick Clegg's Liberal Democrats 51. The Conservatives had gained a net 90 seats and Labour lost 83.

Bloomberg