Euro feels impact of Italian auction woes

TOKYO: Growing fears over the European debt crisis kept pressure on the single currency as it hovered around 11-month lows in Asian trade Thursday.

The euro was trading at $1.2988, compared with $1.2981 late Wednesday in New York, around its lowest levels since January. It also bought 101.39 yen, compared with 101.26 yen.

The dollar bought 78.06 yen, from 78.08 yen in New York.

The widening eurozone problem triggered a sell-off of commodities, including gold and crude oil, as Italian bond yields soared on Wednesday.

Rome paid its highest interest rate since the creation of the euro, raising 3.0 billion euros in five-year bonds at a rate of 6.47 percent.

"The negativity continues, as the European sovereign fears morph into a more traditional economic growth scare," said Emma Lawson, currency strategist at National Australia Bank.

"The news on the sovereign situation continues to filter through; it's no longer making top headlines but is a steady stream of disappointment," she added.

The euro could get a short-term bounce on short-covering, even though markets remain on edge for further eurozone related downgrades, said RBC senior currency strategist Sue Trinh.

"We question how much further downside there is for the euro/dollar" near-term, she told Dow Jones Newswires.