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Thursday, 5 January 2012

Euro plunges on fears of banking crisis as Italy's UniCredit spells out risk of eurozone collapse

The anxiety about the banking sector and fears about the ability of eurozone governments to repay their debts drove the euro to its lowest level against the dollar since September 2010, an 11-year low versus the yen and a near 16-month low against sterling.

The City sources believed this was the first time the warning – inserted by the army of lawyers working for the 27 banks underwriting the cash call – had been carried in such a document but would not be the last.

Trading in the UniCredit shares was halted five times on Thursday because of huge falls as shareholders digested the terms on which it was trying to raise €7.5bn (£6.2bn) to plug a hole in its regulatory capital.

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