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Originally published Tuesday, July 24, 2012 at 9:41 AM

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Euro sinks as Spain's borrowing costs surge again

Europe's spreading debt crisis pushed the euro down to its lowest point against the dollar in more than two years Tuesday.

The Associated Press

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NEW YORK —

Europe's spreading debt crisis pushed the euro down to its lowest point against the dollar in more than two years Tuesday.

Spain's borrowing rates spiked again Tuesday, pushing the country closer to needing a financial lifeline. Investors worry that if Spain has to be rescued, the rest of Europe won't be able to afford it.

The yield on Spain's 10-year government bond spiked above 7.5 percent, a sign that investors are worried about the country's ability to pay its debts. Experts believe that those rates are unsustainable in the long run. Greece, Ireland and Portugal had to ask for emergency financial support after their borrowing rates rose above 7 percent.

Traders also sold the euro after Moody's ratings agency lowered its outlook for Germany, the Netherlands and Luxembourg, saying those stronger countries might have to give financial aid to Spain or Italy.

The euro fell to $1.2061 late Tuesday from $1.2125 late Monday. The euro fell as low as $1.2041 earlier, its lowest point against the dollar since June 2010.

The British pound fell to $1.5504 from $1.5521. The dollar rose to 0.9957 Swiss franc from 0.9906 Swiss franc and to 1.0220 Canadian dollar from 1.0176 Canadian dollar.

The dollar fell to 78.18 Japanese yen from 78.40 yen.

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