European session:

The euro tumbled to a more than three-week low against the dollar and slid versus the yen as rising Italian bond yields stoked concern Europe’s sovereign- debt crisis in deepening.
The euro fell to a record low against the Swiss franc as Austria’s Finance Minister Maria Fekter said Italy will be discussed at today’s monthly gathering of euro-area finance ministers. Australia’s dollar weakened on speculation China will take further steps to cool growth, while Norway’s krone fell after inflation in June was less than economists estimated.
“It’s really a story of independent euro weakness,” said Adam Cole, head of global currency strategy at Royal Bank of Canada in London. “We are seeing contagion spreading to Italy. The bailout facility as it stands would be nowhere near big enough to deal with Italy.”
The euro has fallen in four of the past five days after Moody’s Investors Service downgraded Portugal to below investment grade, reigniting concern the region’s debt crisis will spread beyond Greece as officials remain divided over a solution to the crisis.
The yield on Italy’s 10-year bond rose as much as 19 basis points today to 5.47 percent, driving the premium over German bunds to a euro-lifetime record of 268 basis points. The difference in yield, or spread, between Spanish and German 10- year securities also reached the highest in the euro era, widening to 308 basis points.
A European bailout fund may have to be doubled to 1.5 trillion euros to cover a crisis in Italy, according to the European Central Bank, German newspaper Die Welt reported, citing unidentified “high-ranking” people at central banks. The Financial Times cited unidentified senior officials as saying European leaders are prepared to accept that Greece should default on some of its bonds as part of a new bailout plan for the country that would put its total debt levels on a sustainable footing.
European government calls for banks to share in bailing out Greece are a “credit negative” for nations unable to access market funding, Moody’s Investors Service said today.