June 5 (Bloomberg) -- Luxembourg Finance Minister Jean- Claude Juncker, who leads the group of euro-area finance chiefs, said a further increase in the euro’s exchange rate against the dollar would be unwelcome.

“I think a further gradual increase of the euro would not be welcome, considering the economic situation,” Juncker said at a campaign event in Luxembourg last night before his nation’s June 7 elections.

The euro has climbed 13 percent against the dollar since mid-February and reached a five-month high of $1.4338 on June 3. The European currency traded at $1.4175 at 10:40 a.m. in London, down 0.1 percent on the day.

Juncker pointed to economic data suggesting the recession is bottoming out for the 16 nations that share the single currency. European economic confidence rose for a second month in May and the manufacturing and service industries contracted more slowly last month, recent reports show.

“There’s a series of positive indicators, so we can assume that the European economy isn’t in a freefall anymore, that we have slowly reached the point from which it can go upward again,” Juncker said. “I keep my estimation that a pickup will only happen in the course of 2010 and that it will remain weak.”

The European Union last month forecast the region’s economy will contract 4 percent this year and 0.1 percent in 2010. The global financial crisis, which started with the collapse of the U.S. property market in 2007, has triggered more than $1.47 trillion of writedowns and credit losses at financial companies and sent the worldwide economy into its first recession since World War II, according to data compiled by Bloomberg.

Longest-Serving Leader

Juncker, who also serves as Luxembourg’s prime minister, said earlier this week that he may give up the post of finance chief after the elections. “If our party gets elected, Luc Frieden will move toward the post of finance minister,” Juncker, Europe’s longest-serving leader, told Bloomberg News on June 3. Frieden currently is treasury minister.

Juncker said he doesn’t intend to give up his position as head of the so-called eurogroup of finance ministers from the 16 nations that use the single currency. Juncker, 54, was reappointed last September for a third term as head of the group, a post he has held since 2005.

“This doesn’t mean that I will stop as chairman of the eurogroup,” Juncker said the next day. “Not every minister in the eurogroup is finance minister by title.”

Finance ministers from the euro region convene regularly and their chairman represents them at international meetings, such as those of the Group of Seven. He also is entitled to attend meetings of the European Central Bank’s Governing Council.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

Last Updated: June 5, 2009 06:38 EDT