The euro fell to the lowest in almost four months versus the dollar as talks to form a Greek government failed, fueling concern the nation may leave the shared currency and boosting investor demand for safety. Greek President Karolos Papoulias’ meeting in Athens today with political leaders failed to produce a government after an inconclusive May 6 vote. He called for a meeting tomorrow to form a caretaker government to lead the country until the vote. A second election threatened to extend the country’s political gridlock and reignited speculation Greece will renege on its pledges to cut spending, required by the terms of its 240 billion euros ($306 billion) in bailouts. It added to bets Europe’s sovereign-debt crisis will worsen.
The euro gained earlier after the European Union’s statistics office in Luxembourg said gross domestic product in the region stagnated in the first quarter compared with the prior three months. Germany’s 0.5 percent expansion at five times the pace economists had estimated helped offset weaker GDP in the euro area’s peripheral economies.
Sterling reached the strongest level against the euro since November 2008 as investors sought an alternative to the 17- nation currency. The pound gained 0.1 percent, erasing earlier losses, to 79.60 pence per euro before trading little changed at 79.72 pence.
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