Tokyo - The euro lost further ground in Asia on Tuesday, as Asian equity markets followed plunges in Europe due to worries about the fragile global economy and renewed fears over Greek sovereign debt.
The single currency fell to $1.4057 in Tokyo trade from $1.4109 in London late on Monday. The European single unit also weakened to nearly a six-month low of ¥107.96 from ¥108.57.
As investors fled to the safe haven Japanese currency, the euro dropped below ¥108 for the first time since March 17, shortly after the massive earthquake and tsunami devastated eastern Japan on March 11.
The dollar was flat at ¥76.80 compared to ¥76.86. The US markets were closed on Monday for the Labour Day holiday.
Investors also fled to the safe haven Swiss Franc. The dollar was at 0.7846 Swiss Francs from 0.7870. The euro fetched 1.1019 francs from 1.1074.
European stocks plummeted on Monday. Bonds issued by Greece and Italy fell, and the cost of insuring against default by Italy and France, as indicated by the market for credit default swap (CDS) instruments, rose sharply.
The head of the European Central Bank, Jean-Claude Trichet, warned on Monday of an immediate and imperative need for enactment of a second debt rescue for Greece, and for tightened discipline in the management of eurozone economies.
"Investors are suspicious and jittery as fears (concerning the European sovereign debt crisis) spread," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.
"An economic slowdown has been reconfirmed not only in the United States but also in Europe. Together with the long-term problem of sovereign debts, faded expectation for an ECB rate hike is weighing on the euro," Kamei said.
The European Central Bank is due to hold a policy meeting on Thursday.
"Attention will focus on the various events over coming days including a debate (Tuesday) in Italy's parliament on the country's fiscal austerity package," Credit Agricole said in a note to clients.
"Given that there is unlikely to be any decline in uncertainty over coming days the euro is set to remain under pressure," the bank added.
The banking sector was hit hard following US authorities' legal action against 17 leading international banks over their securitised mortgage trading at the heart of the 2008 financial crisis.
US President Barack Obama will on Thursday announce measures aimed at boosting the economy and employment, while US central bank chief Ben Bernanke will deliver a speech.
The dollar's downside against the yen has been supported by caution over possible yen-weakening market intervention by Japanese authorities after the unit hit a postwar high last month.
Ahead of a Group of Seven meeting of finance ministers and central bank chiefs starting on Friday, Japanese finance minister Jun Azumi has voiced his resolve to convince his G7 counterparts that excessive yen rises are a concern.
The dollar was firmer against other major Asian currencies, rising to Sg$1.2090 from 1.2061 on Monday, to 1 073.28 South Korean won from 1 068.18 and to Tw$29.09 from 29.03.
The greenback also gained to 8 568.75 Indonesian rupiah from 8 536.88 and to 42.30 Philippine pesos from 42.20. It was unchanged at 29.92 Thai baht.