The euro fell against most major currencies after a survey showed German investor sentiment stayed negative this month as the region’s economy struggles amid the debt crisis.

The 17-nation currency weakened from four-month highs versus the dollar and yen amid concern Spain will delay seeking a bailout needed to resolve its financial turmoil. Australia’s dollar dropped for a second day after policy makers said the strength of the currency was damaging economic growth. Sweden’s krona rallied after Riksbank Governor Stefan Ingves said the nation’s growth won’t spark inflation.

“Monetary stimulus has certainly supported improved market sentiment, but the improvement happened without any noticeable change in global economic growth, which is somewhat unusual,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “We’ve seen a tremendous rally in risk assets in the past couple of weeks and it’s time for a breather.”

The euro dropped 0.4 percent to $1.3063 at 9:06 a.m. in New York after appreciating to $1.3172 yesterday, the strongest level since May 4. The common currency declined 0.5 percent to 102.71 yen. It rose to 103.86 yesterday, the highest since May 9. The yen was little changed at 78.63 per dollar.

Market Swings

The euro may continue to weaken against the dollar as the pair’s 14-day relative strength index remained above the level of 70 that some traders see as a sign an asset is overvalued and may be poised to reverse direction. It was at 73.4 today.

The shared currency has appreciated 3.5 percent during the past month, the best performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, amid optimism the ECB will halt the spread of the financial crisis. The single currency has weakened 4.1 percent during the past 12 months.

The yen advanced versus most of its 16 major counterparts as global stocks fell and as a territorial dispute with China escalated. Japanese retailers shuttered stores in China after protestors of Japan’s purchase of uninhabited, disputed islands last week smashed store fronts and overturned cars. The yen traditionally gains in times of economic uncertainty due to the nation’s position as a net-creditor.

The gains were limited as Japan’s central bank started a two-day policy meeting where five of 21 economists surveyed by Bloomberg predict policy makers will announce further monetary easing tomorrow.

Central Bank

The BOJ increased the size of a fund to buy assets such as government debt by 5 trillion yen ($60 billion) to 45 trillion yen in July, and has kept its target for overnight lending between zero and 0.1 percent since October 2010.

“A lack of additional monetary easing could risk a stronger yen,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. The BOJ will probably increase its asset-purchase program by about 5 trillion yen, he said.

The MSCI World Index of stocks declined 0.3 percent and futures on the Standard & Poor’s 500 were little changed.

Sweden’s central bank on Sept. 5 voted to cut its benchmark lending rate for a third time since December to 1.25 percent, predicting economic growth will slow through the rest of the year. One of the banks’ six board members pushed for a deeper cut to 1 percent while another called for more rate cuts this year. The Riksbank signaled it will keep rates unchanged until the middle of next year when increases will resume, according to the central bank minutes released today.

Sweden’s krona gained 0.3 percent to 6.5518 per dollar and advanced 0.7 percent to 8.5632 versus the euro.

Aussie Falls

Australia’s dollar declined after the central bank discussed signs that labor demand had softened “a little further,” housing showed some improvement while a higher currency was taking a toll, according to minutes released of its Sept. 4 meeting.

“Risks are a bit more weighted to the downside” for the Aussie, said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore.

The Australian currency fell 0.4 percent to $1.0437 after climbing to $1.0625 on Sept. 14, the highest since March 20.

Spanish borrowing costs declined at a bill sale today, its first auction since the European Central Bank on Sept. 6 announced a plan to buy the region’s government debt to contain borrowing costs. The nation will sell three-year notes and 10- year bonds on Sept. 20.

ECB Role

“If the ECB is promising to support their bond markets, do they need support?” Alan Ruskin, global head of G-10 foreign- exchange strategy at Deutsche Bank AG, said in an interview on Bloomberg Television’s “Surveillance” with Tom Keene. “At some point in time the market will push Spain to ask for help, and the ECB will support the Spanish bond market. We could possibly still need for Spanish yields to back up a little bit.”

Germany’s ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to minus 18.2 from minus 25.5 in August. The gauge of the current situation fell to 12.6, the lowest since June 2010.

Economic growth in Germany will slow to 0.8 percent for 2012 from 3 percent last year, the Kiel-based Institute for the World Economy said on Sept. 13.