Euro falls in Asia after France, Greece elections

TOKYO: The euro hit its lowest level in more than three months as the electoral defeat of ruling parties in France and Greece stoked fears about the fate of austerity policies aimed at ending the eurozone debt crisis.

The single currency was changing hands at $1.2973 in morning trade, down from $1.3082 on Friday in New York, while the unit also fell against the Japanese currency, dropping to 103.57 yen from 104.50 yen on Friday.

At one stage, the euro dipped to $1.2954, its weakest since late January, while also slumping to 103.22 yen.

Tokyo stocks dropped 2.60 percent in morning trade after Socialist Francois Hollande beat incumbent Nicolas Sarkozy.

Analysts said Hollande's victory underscored the politically difficult task of selling austerity measures designed to tackle eurozone nations' huge debts, with Hollande advocating economic growth over deep public spending cuts.

"The Hollande win in France is not necessarily a surprise. However it brings home the reality that incumbents following the (European Union's) prescribed austerity measures are going to find it difficult to remain elected," National Australia Bank said in a note.

"What happens to these austerity measures now are what are weighing on (the euro)," the bank said.

In the run-up to the French election, the campaign was dominated by a debate over whether austerity measures demanded by Germany or the growth pushed by Hollande was the best way to help the eurozone out of its debt hole.

Hollande criticised Chancellor Angela Merkel's insistence that deep cuts were the way out of the crisis, while the German leader had publicly backed fellow conservative Sarkozy. (AFP)