Poor German data hits euro in Asia

TOKYO (AFP) - The euro slipped in Asia on Wednesday after more gloomy data out of Germany exacerbated worries about Europe's largest economy and the engine of eurozone growth.

In Tokyo afternoon trading, the single currency weakened to US$1.2637 and 135.56 yen from US$1.2659 and 135.62 yen in New York, while the US dollar firmed to 107.33 yen from 107.13 yen.

Germany's widely watched ZEW investor confidence index fell in October for a 10th consecutive month, hitting its lowest level since November 2012.

Berlin later in the day cut its economic growth forecasts to 1.2 per cent for this year and 1.3 per cent in 2015, from previous forecasts of 1.8 per cent and 2.0 per cent, respectively.

The worsening outlook for German growth adds to concerns about the 18-member eurozone, which some analysts say is threatened with recession and is already holding back a global recovery.

"The German economy is losing traction very quickly and there is a real prospect that it could contract again in (the third quarter) after the 0.2 per cent fall in the second quarter," National Australia Bank said in a note.

Adding to the gloom, industrial output in the eurozone fell 1.8 per cent in August, according to data published Tuesday, reversing the previous month's gain that had stoked hopes of a fragile recovery.

Attention will now turn to speeches later in the day by European Central Bank chief Mario Draghi, after the recent announcement of further monetary easing measures to prop up the economy.

"ECB chief Draghi will also be on the wire but judging by recent rhetoric there will unlikely be anything dramatic despite further weakening in eurozone data releases," Credit Agricole said.