The euro fell below $ 1.34 for the first time since September

The euro fell below $ 1.34 for the first time since September, German Chancellor Angela Merkel said the 16-nation currency is in an "extremely serious" situation after Ireland asked for a bailout.

The yen rallied against the Australian dollar and Canadian and North and South Korea exchanged gunfire, encouraging investors to seek refuge. The dollar remained lower against the yen as Federal Reserve minutes showed some policy makers were concerned about the impact of quantitative easing in the U.S. currency. The euro fell against all of its partners in addressing concerns in turn, to Portugal and Spain, the cost of insuring bank debt of nations surges.

"There's a good chance that another domino could fall in Europe," said Kathy Lien, director of research at online currency trader GFT Forex in New York. "The risk of increasing insecurity has been and will continue currencies under pressure and make investors nervous."

The euro fell 1.9 percent to $ 1.3368 per euro at 2:20 pm in New York from $ 1.3627 yesterday. The Swiss franc advanced 1.1 percent to 1.3333 against the euro, from 1.3484. The yen gained 2.1 percent to 111.24 per euro, from 113.56. The dollar decreased 0.2 percent to 83.16 yen from 83.33.

European currency slid to $ 1.3363 earlier, its lowest level since 24 September. It was the biggest intraday decline since Aug. 11, when the euro fell to 2.4 percent in demand for the safety of the dollar a day after U.S. Federal Reserve citing lower economic growth.

Minutes of the Fed

Minutes of the November 2-3 meeting of Federal Reserve policy makers disagreed on monetary expansion to stimulate record this month, with most seeing a boost to growth and employment and a minority concerned about risks to inflation and the dollar.

South Korea won down before more than six months, with the contract delivery month without slipping 3.3 percent to 1,166.50 per dollar as South Korea said the North fired rockets into the south, near the border, killing two soldiers.

The contract fell to 4.2 percent at 1,179.10. The won ended the day depreciation of 1 percent to 1,137.46 before the clashes were released.

A South Korean Defense Ministry official, who requested anonymity, said the military scrambled fighter jets and "respond forcefully" to provocation.

"The North Korean situation has everyone on edge," said Andrew Busch, global currency strategist at Bank of Montreal in Chicago. "You have all the European debt situation at stake, then put a set of safe haven in the top of that. It really speeds up moves."

Declining stocks

500 of Standard & Poor's declined 1.6 percent. Crude oil futures fell 0.7 percent to $ 81.17 a barrel.

The Canadian dollar fell 0.6 percent to C $ 1.0247 versus the U.S. currency and fell 0.9 percent to 81.08 yen in demand for safety as the clash in Korea Canadian overshadowed a report showing that annual inflation accelerated last month more than economists forecast.

The Australian dollar fell 1.9 percent to 80.79 yen. New Zealand kiwi fell 1.5 percent to 76.02 U.S. cents. Malaysian ringgit weakened for the first time in four days, slipping 1 percent to 3.1336 against the dollar.

"The risk stocks and currencies are out of the news from Korea," said Geoff Kendrick, director of the European foreign exchange at Nomura Holdings Inc. in London.

Euro versus U.S. dollar

The euro fell against the dollar a day after the Irish Prime Minister Brian Cowen, has announced that he will seek early elections next year. Over the weekend, the government said it would ask the European Union and the International Monetary Fund to rescue the country's banking system.

parliamentary support for Cowen evaporated yesterday after the Green Party, its coalition partner, said he "misled" voters in the last two weeks.

Merkel said in Berlin that will to keep fighting for a permanent rescue system requires bondholders to accept the loss of sovereign defaults since 2013. At the same time, the "difficult conditions" be imposed on any nation seeking a ransom.

The cost of insuring the subordinated bonds Spanish and Portuguese bank rose as traders of credit default swaps, "he turned his attention to southern Europe after Ireland's rescue.

Swaps Banco de Portugal SA Espirito Santo rose to a record contract while Banco Bilbao Vizcaya Argentaria SA, the second largest bank in Spain, climbed to its highest in more than four months.

The euro may fall further pledge to hold elections Cowen doubts that the terms of the rescue of Ireland remained, according to Commerzbank AG.

"Those who pushed to Ireland in this agreement has been reached no more than a Pyrrhic victory," wrote a team of analysts led by Ulrich Leuchtmann at Frankfurt in a research note today. "The usual effect calm in the bond markets will not emerge until after elections are held. As a result of pressure will not leave the euro."
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