Euro Falls as German, French Economies Shrink More Than Forecast

The euro weakened after reports showed Europe’s two largest economies contracted in the fourth quarter more than analysts forecast, damping demand for the 17-member currency.

The yen snapped a two-day advance versus the dollar as investors overlooked the Bank of Japan’s decision to keep its asset-purchase target unchanged and speculated it will add stimulus to turn around an economy in recession. The euro weakened for a third day against the yen after data showed German gross domestic product fell 0.6 percent from the third quarter, more than the 0.5 percent contraction predicted in a Bloomberg News survey. The French economy also shrank.

The euro declined 0.4 percent to $1.3398 at 8:27 a.m. London time. It fell 0.3 percent to 125.31 yen, after sliding 0.6 percent over the past two days. Japan’s currency weakened 0.2 percent to 93.53 per dollar.

The euro has strengthened 4 percent in the past three months according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The yen has tumbled 17 percent, the worst performer in the indexes, and the dollar declined 1.7 percent.

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