China's new investment rules report sends dollar down vs euro

The euro fell against the dollar on Friday in Asia as China's reported new investment rules damped local share markets and fueled speculation that the global economy will likely experience slower-than-expected growth ahead.

Chinese shares declined due to the story, with the benchmark Shanghai Composite Index falling 2.3% as of 0450GMT. Japanese equity markets also weakened.

When stocks fall, the European currency often follows suit because investors sell high-yielding assets to cover incurred losses. The euro zone has higher interest rates than the U.S. and Japan do, according to Wall Street Journal.

The Dollar Index advanced for a fifth day, matching a stretch of gains in August. The euro fell versus 14 of its 16 most-traded counterparts as France backed German calls for investors to share the cost of restructuring sovereign debt. Group of 20 leaders meet tomorrow to tackle foreign-exchange and trade imbalances for a second day at a summit in Seoul.

"There's risk-off on the table; equities are contributing to it," said Jessica Hoversen, a Chicago-based analyst at the futures broker MF Global Holdings Ltd. "The problems in Europe's periphery have come under greater scrutiny," Bloomberg says.