Fresh concern about when Spain will ask for a bailout, a weak German business confidence report and Greece's budget shortfall sparked safe haven flows on Monday.

The dollar rose to a one-week high against the euro amid continued uncertainty over whether Spain will become the latest Eurozone member to seek a bailout and as markets mulled a weaker-than-expected German sentiment survey.

German think tank Ifo said business sentiment in the Eurozone's biggest economy declined in September for a fifth straight month.

Fears about the debt crisis also flared up after Spain's finance minister Luis de Guindos says the country is in no rush to ask for financial aid. The Spanish government is expected to give a budget plan later this week and a report on its banking system.

Greece was also in focus after weekend press report said the nation's budget shortfall is almost double initial estimates. The shortfall needs to be paid in order to meet international conditions for financial aid.

The ICE dollar index, which measures the US currency against a basket of six other currencies, advanced to 79.574 from 79.324 on Friday.

The euro dropped to $1.2924 from $1.2988 the previous session and against the yen the single currency fell to ¥100.54 from ¥101.43 before.

The dollar lost ground against the yen on Monday, to trade at ¥77.86 from ¥78.11 as concern about Europe eroded risk appetite.

Sterling firmed against the euro at the start of the week, touching its highest level in over two weeks. The single currency bought 79.69p after trading at a low of 79.55p earlier in the session.

The Australian dollar changed hands at $1.0422 from $1.0453 previously.





CJ

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