Filomena Scalise

New York - The euro fell 0.4 percent against the dollar on Tuesday, touching fresh two-year lows as Spain appeared to inch closer to a bailout.

The euro fell as low as $1.2059, its lowest level since June 11, 2010, before recovering slightly to $1.2065 from $1.2137 in New York late on Monday.

“It seems markets this week have recognised that Spain is following Greece's path, with Spain's bond yields at levels that forced policymakers to step in to help Greece and Portugal,” said Ishaq Siddiqi, market strategist at ETX Capital.

Spain had to pay higher rates on Tuesday to raise 3.05-billion euros in short-term funds, coming under pressure again on the markets on concerns that Madrid will need a full sovereign debt bailout.

The dollar eased to 78.19 Japanese yen from 78.37 yen.

The dollar rose 0.4 percent against the Swiss franc. The pound was virtually unchanged at $1.5508. - Sapa-AFP