Filomena Scalise

New York - The lack of signs of progress on rescuing Spanish banks sent the euro lower against the dollar on Tuesday, with phone talks between G7 finance officials giving little hope of a quick resolution.

At 21h00 GMT, the euro was at $1.2450, down from $1.2494 on Monday.

“The dollar returned to the plus column for the first time in three sessions as doubts resurfaced about Europe's debt problems,” said Travelex.

“Rattling market sentiment Tuesday were remarks by a Spanish official who acknowledged the nation was steadily losing access to affordable financing in credit markets.”

The yen slipped again against both, trading at 98.03 yen per euro from 97.89 on Monday and to 78.72 to the dollar, compared to 78.36.

Eyes were on how the European Central Bank would move when its policy board meets on Wednesday.

“The near term outlook for (the euro-dollar rate) hinges on the ECB's degree of proactiveness,” said Kathy Lien of GFT.

“Throughout Europe's sovereign debt crisis, the ECB has only been reactive. But after avoiding the issue for weeks and constantly passing the ball back to politicians, ECB President (Mario) Draghi will have no choice but to address the deterioration in economic data, the strain on Spanish finances and the decline in asset markets around the world.”

The British pound lost ground on the dollar, slipping to $1.5376 from $1.5383. The greenback traded at 0.9645 Swiss francs, up from 0.9611 francs. - Sapa-AFP