Koers euro daalt na mislukte besprekingen over grondwet en begroting (en) - Main contents

The euro appears to be the main victim of the failed EU summit, ending last Friday without agreement on future spending for the bloc.

From Friday to Monday the value of the 12-nation currency dropped 1.1 percent against the dollar, when traded in New York.

"We didn't think it would affect the euro that much, and that sentiment would turn so bad," said senior European economist at Goldman Sachs in Paris, Nicolas Sobczak, to the New York Times.

The euro has fallen 3 percent against the dollar since the French referendum while in total the euro has dropped some 10 percent against the dollar since it was at its highest by the end of 2004.

In Italy, the Lega North, a party which holds ministerial posts in Silvio Berlusconi's government, called for a revival of the lira as a "parallel currency" to the euro, which would remain the currency of the state budget, tourism and foreign trade.

Such talk could spark further unrest about the currency's stability.

The decline has also added to speculation that the European Central Bank will reduce interest rates from the current two percent, a level unchanged for almost two years.

The slide of the euro is not necessarily only bad news, as it will reduce the price of European products in the global market and could help economic growth.

While the euro rates are expected to come down, the US target interest rate has been upgraded eight times in the past year to 3 percent. A further 0,25 percent raise is expected next week, according to all but two of 67 economists surveyed by Bloomberg News.