2012.05.24 10:29:08 Euro Drubbing Continues; Currency At New 22-Month Low

--Panic-tinged conditions return to currency markets --Euro hits notable new lows By Jessica Mead Of DOW JONES NEWSWIRES LONDON (Dow Jones)--A period of calm in Asian trading hours broke abruptly as European trading got underway Thursday with the euro plunging to its weakest level against the dollar since July 2010 with dismal German activity data and Greek euro exit fears scraping market nerves. The common currency sank below $1.2516 against the dollar, its lowest since July 6 2010 and also lost ground against the pound and the yen, sinking to its weakest since early February against the Japanese currency. The German Ifo Business Climate Index for May fell to 106.9, below the 109.5 expected by economists. The Ifo Institute warned that the uncertainty in the euro zone was affecting the German economy. Initial estimates of activity data also published Thursday showed that Germany's private sector contracted in May for the first time in six months, weighed down by a deepening decline in the manufacturing sector. For the euro zone as a whole, activity in both the manufacturing and services sectors were worse than expected according to the flash purchasing managers' indexes. "Overall, this market is keen to sell rallies and could discount any positive outturns, while using negative ones as another reason to sell," said Lauren Rosborough, currency strategist at Societe Generale in London. However, the selloff was broadly limited to the euro, since other risky bets such as the Australian dollar did not immediately fall to the same extent. Analysts at the Bank of Tokyo-Mitsubishi UFJ warned that the euro crisis is in its "most dangerous phase" with investors growing increasingly concerned that a Greek exit from the common currency could be imminent. At 0820 GMT, the euro was trading at $1.2541 against the dollar. -By Jessica Mead, Dow Jones Newswires, 44 20 7842 9256; jessica.mead@dowjones.com (END) Dow Jones Newswires May 24, 2012 04:29 ET (08:29 GMT)