Euro sinks to 2-month low after Irish bailout

NEW YORK (AP) — The euro tumbled to a two-month low — below $1.34 — in New York Tuesday as investors remained wary of debt problems facing Ireland, Portugal and Spain.

A military clash between North and South Korea on Tuesday also helped support the dollar broadly, because traders see the U.S. currency as a safe place to put money in times of international turmoil. The dollar jumped to 1,160.25 South Korean won from 1,127 won late Monday.

The euro dropped to as low as $1.3385, its weakest level against the dollar since Sept. 21.

Ireland on Sunday asked for a massive loan from the European Union, as Greece did in May, and investors remain anxious that other countries in Europe will also have to seek aid.

"The package for Ireland has ultimately been shrugged off by the markets," said Brown Brothers Harriman analyst Win Thin in a note to clients Tuesday. Borrowing costs continue to rise in Ireland, Greece, Portugal and Spain. Ireland requested aid on Sunday because the massive cost of the bailout of its troubled banks left it — and its banks — unable to borrow from the bond market.

While investors eye European governments warily, a report on the U.S. economy showed it was slightly healthier than had been thought. The U.S. government said Tuesday that the economy grew at a 2.5 percent annual pace in the July-September quarter, better than the previous estimate of 2 percent. The government revised higher its estimate of how much U.S. shoppers spent and how many goods U.S. companies sold abroad.

In other trading, the British pound slid to $1.5847 from $1.5948, and the dollar slumped to 82.98 Japanese yen from 83.29 yen. Traders also consider the yen a safe-haven currency.

The dollar also leapt against currencies linked to countries that are big commodity exporters, such as the Australian and Canadian dollars. Currencies of countries that are heavy producers of commodities such as oil, coal and iron ore tend to rise alongside worldwide stock prices, as a more robust global economy would increase demand for those basic materials.