The euro fell against the dollar as European CommissionPresident Jose Barroso said the region is facing a “truly systemiccrisis.”

The 17-nation currency pared declines from a five-week low afterthe European Central Bank was said to be buying Spanish and Italiangovernment bonds, narrowing their yield gap over benchmark Germanbunds. The pound fell for a third day against the dollar as U.K.unemployment increased and joblessness among young people climbedabove 1 million for the first time since at least 1992. The DollarIndex gained for a third day as European stocks fell, boostingdemand for the U.S. currency as a haven.

“Each day that goes by the situation is getting worse, and it'sinevitable under those circumstances that the currency comes underpressure,” said Derek Halpenny, European head of currency researchat Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “There'sunbelievably difficult decisions that lie ahead for Europe in termsof resolving this crisis.”

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