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Euro falls on economic growth fears

By Tom Finn

LONDON (Reuters) – The euro fell nearly half a percent on Friday after signs that economic growth could be slowing across the euro zone.

Euro zone business growth slowed much faster than expected this month, a widely-watched Purchasing Managers Index (PMI) survey showed.

The disappointing readings were hastened by an ongoing U.S.-led trade war and will likely be of concern to the European Central Bank which is expected to draw a line under its 2.6 billion euro asset purchase program next month.

German private-sector growth slowed to its lowest level in nearly four years as factories in Europe’s largest economy churned out goods at a slower pace.

The single currency, earlier trading positive, dropped more than 0.4 percent to as low as $1.1402 after the surveys were published. (EUR=EBS)

The euro also fell 0.2 percent against the Swiss franc to 1.1326 francs. (EURCHF=EBS)

“Particularly the German PMI was disappointing … The environment for the euro is getting more difficult,” said Thu Lan Nguyen, a Frankfurt-based strategist at Commerzbank (DE:CBKG), pointing to a dispute over Italy’s spending plans and concerns about the bloc’s growth outlook.

“The economy in the euro zone has cooled significantly over the past months and unless this is just a brief interlude the European Central Bank might be forced to stick to an expansionary monetary policy,” she said.

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