Debt crisis puts $ on a tailspin

LONDON, July 29 (news agencies and on-line reports): The dollar fell to a four-month low against the yen and hovered near record lows versus the Swiss franc on Friday.

The euro also came under fresh pressure as investors sought safe-haven currencies on mounting sovereign debt problems.

Eurozone inflation unexpectedly slows in July to 2.5%

Eurozone inflation unexpectedly slowed in July to 2.5%, raising questions about when the European Central Bank (ECB) might raise interest rates again.

The preliminary estimate is down from 2.7% in June, according to the European Union statistics office Eurostat.

The July reading comes as a surprise after data earlier this week suggested inflation in Germany, Europe's largest economy, edged up to 2.4%.

Eurozone crisis fears continue as Italy forced to pay higher rates to borrow

The Italian government was forced to pay the highest borrowing costs for 11 years in a bond auction that underscored market fears that a new phase of the European debt crisis is set to be unleashed.

Italy successfully sold €2.7bn (£2.4bn) of 10-year bonds but only after yields had soared to 5.77pc – compared to 4.94pc at the last auction a month ago. Traders argued that last week's €159bn Greek bail-out was not enough to prevent contagion to the bigger European economies.

The Euro Crisis: Big Rescue, Big Doubts

This time is different. Really. That was the message from European leaders after the 11th debt-crisis summit in 17 months produced an additional €109 billion ($157 billion) in loans for deficit-bloated Greece, easier aid terms for Ireland and Portugal, and a retooled bailout fund to prevent markets from trashing Spain and Italy as well. The euro, as well as the distressed countries’ bonds, rallied.

Greece credit rating cut by S&P on 'likely default'

Ratings agency Standard & Poor's has cut Greece's credit rating, saying that eurozone plans to restructure the country's debts would constitute a "selective default".

Under the plans, Greece would be given longer to repay its debts and private investors would take a hit.

S&P said it had cut Greece's rating to CC from CCC.