The euro slipped versus other major currencies on Monday as global stocks dropped sharply, sending traders toward lower-yielding currencies.

The euro dropped to a two-week low of 1.3114 against the U.S. dollar. The single currency has been trending lower since hitting a 2 1/2-month high of 1.3738 in mid-March.

As there were little economic reports to chew, investors reacted poorly to some negative news from the auto sector as the U.S. government stated that bankruptcy might be the best solution for troubled automakers in the country, including General Motors, whose CEO Rick Wagoner has been forced to quit the job.

The Obama administration will continue to provide operating funds for the next few weeks, but it has given both GM and Chrysler a final deadline, threatening bankruptcy if the beleaguered auto giants do not significantly increase their efforts to restructure their business.

The European currency slipped to a three-day low of 0.9255 against the British pound. Earlier this month, the euro had hit a six-week high of 0.9484.

A survey conducted by the Confederation of British Industry and PricewaterhouseCoopers showed that a balance of 40% of UK's financial services firms reported a reduction in headcount, while the numbers employed in the sector fell at the heaviest rate since June 1993. A negative balance of 38% forecast employment to decrease over the next three months.

The euro turned to a two-week low of 126.40 versus the Japanese yen. The drop took the single currency away from last week's five-month high of 134.50.

Industrial output in Japan plummeted by 9.4% in February compared to the previous month, the Ministry of Economy, Trade and Industry said. Output fell for the fifth straight month and marked the third-largest fall on record. That was slightly worse than forecasts that called for a decline of 9% following the 10.2% decline in January.

On the economic front, a monthly survey carried out by the European Commission showed that the economic sentiment index unexpectedly dropped to 64.6 in March from 65.3 in February. Economists were looking for a reading of 65.8. The indicator stood at its lowest level since the series began in January 1985. The fall in the index was attributed to the deteriorating sentiment in the industry and services sectors.

The Bank of Spain replaced managers of the Caja Castilla La Mancha and took over its administration. The government also provided a guarantee of up to EUR 9 billion or US$12 billion of the liabilities.

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