The euro was 0.4 percent from a 17- month low before the European Financial Stability Facility, Spain and Greece sell bills today amid concern rating cuts by Standard & Poor’s will sap demand for European debt.

The common currency maintained a two-day decline against the yen before German data today that may show business confidence remained subdued this month in Europe’s biggest economy. China grew at the slowest pace in more than two years, according to economist estimates before statistics due today.

“You can’t help becoming fairly pessimistic about the euro,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency margin company. “The EFSF’s downgrade limits options available for European leaders to overcome the sovereign crisis, and poor results at today’s auction are likely to lead to euro selling.”

The euro traded at $1.2677 as of 9:37 a.m. in Tokyo from $1.2667 yesterday. It slid to $1.2624 on Jan. 13, a level unseen since August 2010. It fetched 97.38 yen from 97.26 after touching 97.04 yesterday, the lowest since December 2000. The dollar was little changed at 76.82 yen. U.S. markets were closed yesterday for a holiday.

S&P yesterday removed the AAA rating of the EFSF, which is designed to fund rescue packages for Greece, Ireland and Portugal, after reducing the top grades of France and Austria by one level on Jan. 13. The company also downgraded Italy, Portugal and Spain.

Debt Sales

The euro area’s bailout fund is scheduled to sell 1.5 billion euros ($1.9 billion) of bills today.Greece will also offer bills, while Spain will auction securities maturing in 364 and 518 days.

A German index of investor and analyst confidence in the economic outlook was minus 49.4 in January, according to a Bloomberg News survey of economists before the ZEW Center for European Economic Research releases the data today. While it would be an improvement from minus 53.8 in December, the gauge would be below zero for an eighth month.

Greece will resume talks tomorrow with the Institute of International Finance, which represents private creditors, Greek Finance Minister Evangelos Venizelos has said. The Washington- based IIF broke off talks last week after failing to agree with the government about how much money investors will lose by swapping their bonds.

“Greece will default very shortly because even the debt exchange that has been proposed is a default by our definition,” Moritz Kraemer, S&P’s managing director of European sovereign ratings, said yesterday in an interview with Bloomberg Television. “It’s a distressed exchange.”

China’s Growth

China’s gross domestic product expanded 8.7 percent in the three months ended Dec. 31 from a year earlier, the slowest pace since the second quarter of 2009, another poll of economists shows before the report today.

Canada’s currency held a gain from yesterday before U.S. data today projected to show manufacturing in the New York region expanded and after oil prices rose.

The Federal Reserve Bank of New York’s general economic index rose to 11 in January, the most since May, according to economist projections before the data. Readings higher than zero signal expansion. Oil prices rose 1 percent to $99.69 in electronic trading on the New York Mercantile Exchange yesterday, the highest settlement since Jan. 11.

Canada’s “major trading partner growth is improving,” Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney, wrote in a report today, referring to the U.S. “Combine this with higher oil price and it may finally allow the Canadian dollar to play catch-up.”

The Bank of Canada is scheduled to announce its decision today on interest rates. The central bank will hold the rates at 1 percent, where they have been since September 2010, a survey of economists shows.

Canada’s currency rose 0.1 percent to C$1.0172 per U.S. currency after gaining 0.5 percent yesterday.

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.

To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net

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