• Will a too strong krona spoil the Swedish party?

The European single currency fell to a three-week low against the dollar Monday on eurozone debt jitters before a key finance meeting in Brussels and falling industrial production in the bloc.

The euro on Monday also hit its lowest level against the Swedish krona in a decade, on the eve on an expected interest rate rise by the central bank there.

The krona, which suffered badly as the global financial crisis hit in late 2008, has also been boosted by rising local interest rates.

They dipped as low as 0.25 percent during the crisis but today stand at 1.25 percent, picking up on the back of record economic growth driven by a rebound in exports.

As a result, the Swedish currency has in recent months risen along with the Swiss franc to become the star of the European exchange market.

In midday trading the euro fell to 8.7523 Swedish krona.

Traders also speculated over the next head of the European Central Bank (ECB) and outlook for the region's interest rates.

In late London deals, the shared eurozone unit edged down to $1.3467 against 1.3567 dollar in New York late Friday.

Against the Japanese currency the dollar fell slightly to 83.36 yen from 83.48 yen on Friday.

"There have been signs on the bond markets for some weeks that the yields of the peripheral countries have been rising again and only ECB intervention seems to have been able to prevent a notable rise," said Commerzbank analyst Ulrich Leuchtmann.

"This illustrates that the seeming calm in the Eurozone debt crisis over the past few weeks was nothing but a short breather."

Attention was therefore focused on the Eurogroup meeting of finance ministers in Brussels.

"There have been signs on the bond markets for some weeks that the yields of the peripheral countries have been rising again and only ECB intervention seems to have been able to prevent a notable rise.

However the European Union finance ministers meeting "may throw up even more disagreements within the currency bloc about a long-term resolution to the debt crisis," warned Kathleen Brooks of Forex.com.

With continued uncertainty in Egypt following the ouster of Hosni Mubarak, and opposition protests radiating out across the Middle East, for many the US greenback will resume its role as a safe haven currency, particularly given Europe's differences.

Traders also reacted to news that eurozone industrial output fell for the first time in three months in December, when harsh winter weather hit production in Germany and elsewhere.

Industrial production fell 0.1 percent from November but was 8.0 percent stronger than in December 2009, the European Union's Eurostat agency said Monday.

The December figures were slightly weaker than the market consensus estimate of flat output on the month and an 8.1 percent increase on the year in a Dow Jones Newswires survey of economists.

Also weighing on the euro were questions over who will head the ECB after Jean-Claude Trichet's retirement later this year.

The euro came under pressure late last week from news of the resignation of Germany's central bank chief Axel Weber, confirming he is no longer in pole position to become the next ECB chief.

The German government said on Monday that a new German candidate was possible.

Meanwhile in the run-up to the Brussels meeting, markets were also jarred by speculation over the struggling German regional lender WestLB.

In London on Monday, the euro changed hands at $1.3467 against $1.3567 in New York late Friday, at 112.28 yen (113.26), £ 0.8413 (0.8452) and 1.3080 ((1.3144).

The dollar stood at 83.36 yen (83.48) and 0.9711 Swiss francs (0.9688).

The pound was at $1.6008.

On the London Bullion Market, the price of gold eased to $1,360.50 an ounce from $1,364 late on Friday.