The euro has continued to weaken, with EU leaders appearing happy to stand by and watch the currency decline. There now appears little to stop the euro falling further to parity with the US dollar. It closed at $1.0300 from $1.0356 a day earlier, and at 64.37p against sterling from 64.54p. As a result, the pound was trading at 81.49p sterling from 81.95p.

In a move which did nothing to support the euro - and which some took as tacit approval of its decline - EU leaders continued to confuse the money markets with a variety of comments on the currency. They added to the uncertainty by removing a key passage from the communique following the Cologne Summit that said they were unconcerned about the euro's slide.

The EU Commission President, Mr Romano Prodi, said the decline would help the European economy and was not a matter for concern.

The German Chancellor, Mr Gerhard Schroder, said his government was "eminently interested in a stable euro". The Belgium central bank governor said the euro weakness was to some extent "desirable in view of the economic situation in Europe."

According to Mr Jim Power, chief economist at Bank of Ireland, the euro is also being undermined by a lack of market confidence in the the European Central Bank president, Mr Wim Duisenberg.

The German finance minister, Mr Hans Eichel, noted that the US was in the better position of having only two officials, the chairman of the Federal Reserve and the Treasury Secretary, to pass comment on the dollar exchange rate.

But according to Mr Marco Kramer of Paribas Capital Markets, there is little Europe can do to stop the cacophony.

"You have 11 sets of national interests, so you cannot speak with one voice. One of Europe's disadvantages is that we have different states with different histories."

And according to Mr Power, some of these interests are at odds with the others. "The French have always been preoccupied with keeping the franc low against the dollar for competitive reasons. They are now in the middle of trying to push it lower and might be happy to see the end of Mr Duisenberg at the same time." Frenchman Mr Jean-Claude Trichet, the governor of the Bank of France, is the man likely to replace Mr Duisenberg whenever he steps down.

According to Mr Power, the only reason the euro did not sink further yesterday was the US employment numbers. Employment only increased by 11,000 against expectations of a 240,000 increase. "Against that background, the dollar found it difficult to build on $1.2070, but it will do and parity should be reached within a month."

Further highlighting the weakness in one of the main euro zone economies, wholesalers in Germany reported a slump in business in April, data published by the Federal Statistics Office showed. Wholesale sales fell by a nominal 6.7 per cent in April from the figure for April 1998 and were down by 3.8 per cent in real, or price-adjusted, terms. The renewed weakness of the fledgling European currency yesterday followed a tentative recovery ignited by the move towards peace in Yugoslavia announced during the previous day's trade.

A currency analyst at Paribas bank, Nick Parsons, said that hopes of peace in Kosovo came as scant relief to the beleaguered currency.