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Euro Weakens on Speculation Sovereign-Debt Crisis Is Spreading

The euro weakened against its most-traded counterparts as a drop in German industrial production, lower U.K. growth forecasts and ratings cuts for Spain and Italy raised concern Europe’s sovereign-debt crisis is worsening.

The pound strengthened by the most in more than a month against the euro after Bank of England Governor Mervyn King said cutting U.K. interest rates may be counterproductive, damping speculation the central bank will reduce borrowing costs to spur growth. The currencies of Sweden and Norway strengthened to 12-and nine-year highs against the euro on haven demand.