The euro slid to a two-year low against the dollar and a near 12-year trough against the yen on Monday on concerns Spain will have to seek a full sovereign bailout.

Spanish bonds yields soared to their highest levels since the euro was created, despite euro zone finance ministers approving on Friday terms for a loan of up to 100 billion euros for Madrid to recapitalize its banks. Analysts said this was the prime driver of the euro's fall.

Murcia became the second Spanish region to request financial assistance from the government, after Valencia, with media reports suggesting six regions could seek aid.

The week is off to a challenging start as rising fears over Europe push risk aversion higher, said Camilla Sutton, chief currency strategist at Scotia bank in Toronto. Most of the focus is on Spain, with rising concern it too will need to access financial aid.

With no EU summit on the horizon and European vacation season upon us, capital is moving rapidly from the more exposed regions to the stronger sovereigns, Sutton said.

The euro fell as low as $1.2067, its weakest since June 2010 and creeping ever closer to the 2010 low of $1.1875, using Thomson Reuters data. The euro was last at $1.2074, down 0.7 percent from Friday's close.

After closing at $1.2156 in New York on Friday, it gapped lower to open at $1.2120 in Asia on Monday morning, signifying the market perceived the value of the euro had dropped over the weekend in response to events in the euro zone.

Against the yen it dropped on the day to 94.22 yen, a level not seen since late 2000.

The euro tumbled not just against safe havens like the dollar and the yen but also against currencies that usually fall in times of heightened risk aversion in financial markets.

At the session lows of the day it hit a record low versus the Australian dollar, a more than 3-1/2 year low against sterling and a 9-1/2 year low versus the Norwegian crown.


The prognosis for Greece also appeared to darken, only adding to the reasons for investors to sell the euro. German magazine Der Spiegel reported on Sunday that the International Monetary Fund may not take part in any additional financing for Greece, highlighting growing frustration with Athens.

Speaking two days before a team of international lenders arrive in Athens to push for further spending cuts in return for more rescue payments, Prime Minister Antonis Samaras said Greece was in a Great Depression similar to the United States in the 1930s.

Looking ahead, analysts said any weakness in euro zone provisional purchasing managers' surveys on manufacturing and services sector activity due on Tuesday would only add to the gloom and intensify selling pressure on the euro.

With risk aversion back on the rise, the safe-haven U.S. dollar and yen found good support. The dollar also hit a 19-month high against the Swiss franc.

The yen was the biggest gainer. The dollar fell to a seven week low against the yen of 77.95 yen. The dollar last traded down 0.3 percent at 78.19 yen.

Japan's Vice Finance Minister for international affairs was reported as saying the country will not exclude any options when responding to excessive currency moves, although market players said the authorities were unlikely to consider intervening while dollar held above 76 yen.

The Australian currency fell sharply against the dollar and was last down 0.9 percent at $1.0278, with traders saying worries about slower Chinese growth only added to investor risk aversion.