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Euro drops to lowest since Sept. 22

The euro sank under 1.33 U.S. dollars for the first time for two months, Spanish borrowing rates rose and European stocks were mixed on Wednesday on spreading concern about eurozone debt and a spike in Korean tensions.

In morning trading in London, the single currency dropped to US$1.3285 — the lowest point since Sept. 22 — but then won back some ground.

The euro's level on Wednesday compared with US$1.3364 late in New York, Tuesday.

Earlier this week, the euro had briefly spiked above US$1.37 on relief over the Irish bailout news. However, it has nevertheless shed almost three percent in value so far this week on mounting eurozone debt concerns.

In Asian trade Wednesday, the euro edged higher despite Standard & Poor's move to lower its credit ratings for Ireland, while tensions on the divided Korean peninsula pushed the won lower.

The euro rebounded from the previous day's two-month lows to hit US$1.3401 in afternoon trade in Tokyo, with the downgrade of Ireland having already been priced in, said analysts.

Against the yen, the single currency traded at 111.55, compared with 111.17 in New York.

Tensions on the Korean peninsula remained at their highest in years after North Korea fired artillery shells on to a South Korean island Tuesday afternoon, killing at least two South Korean soldiers and sparking global condemnation.

The won fell to 1,147.38 against the dollar, from 1,129.80 in New York overnight.

The safe-haven greenback rose against the yen, to 83.29 from 83.16 yen in New York, benefiting from the erosion of risk appetite on eurozone worries and the Korea tensions.

The dollar edged down to 30.08 Thai baht from 30.11 on Tuesday. But it rose against other Asian currencies, to 1.3112 Singapore dollars from 1.3069, to 30.48 Taiwan dollars from 30.43, to 44.15 Philippine pesos from 43.98 and to 8,980.50 Indonesian rupiah from 8,925.00.

Investors covered short positions ahead of the U.S. Thanksgiving holiday on Thursday, but the euro continued to face pressure from worries over the debt problems of some eurozone economies.

The rating agency's move followed a proposed bailout of debt-laden Ireland by the European Union and the International Monetary Fund of up to 90 billion euros (US$122 billion).

Standard & Poor's said it is “lowering its long-term sovereign credit rating on the Republic of Ireland to 'A' from 'AA-' and its short-term rating to 'A-1' from 'A-1+'.”

S&P said it was putting Ireland on credit watch “with negative implications.”

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