By Lucy Meakin - 2012-05-29T10:44:31Z

The euro was set for the biggest monthly decline versus the dollar since September after Spain signaled it may sell more bonds to recapitalize the Bankia group, stoking concern the region’s debt crisis is deepening.

The 17-nation currency was 0.3 percent from the lowest since July 2010 and German 10-year bund yields dropped to a record low after European Central Bank Governing Council member Ewald Nowotny said a revival of bond purchases is not being discussed. The Dollar Index traded near the highest in 20 months as concern Europe’s turmoil is hurting economic growth boosted demand for the safest assets.

The euro was little changed at $1.2536 at 11:24 a.m. London time after touching $1.2496 on May 25, the lowest since July 6, 2010. It has lost 5.3 percent in May. The euro traded at 99.75 yen after having dropped 2 percent in the past five days to 99.67 yesterday. The yen was little changed at 79.57 per dollar.

The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, was at 82.237. It climbed to 82.461 on May 25, the highest since Sept. 13, 2010.

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