Euro tumbles to 7-week low against dollar

    NEW YORK (AP) ? The euro fell against the dollar Monday on fears that the European debt crisis could spread to larger economies in the European Union.

    The shared European currency fell below $1.40 for the first time since May 23 and hit a record low against the Swiss franc as European officials met to discuss a second round of aid for Greece. Fears that Greece could soon default on its debt has made euro trading volatile since late spring.

    Investors are also anxious about the economic health of Italy, Europe’s No. 3 economy, and of Spain, analysts say. Borrowing costs are rising. The European funds available for rescue loans might not be enough to aid the larger economies if they need bailouts.

    Investors are concerned that a second round of aid for Greece could include some kind of help from banks and other private-sector lenders. If Greece is allowed to default on some of its bonds as part of a new package, borrowing costs for other indebted European countries could rise. That could also hurt the euro.

    “Contagion effects are spreading ? and to countries that so many believed would be immune, like Italy,” wrote Gluskin Sheff economist David Rosenberg in a research note. He said that Italy’s weak economic growth, its need to raise funds to keep its government running and the growing interest on its debt are causing concern.

    In late trading Monday, the euro fell to $1.4024 from $1.4248 late Friday. It earlier touched as low as $1.3984.

    In other trading, the British pound dropped to $1.5912 from $1.6031. The dollar rose to 96.81Canadian cents from 96.14 Canadian cents.

    The dollar was weaker against the other currencies considered safe bets by investors, dropping to 80.13 Japanese yen from 80.71 yen and to 0.8351 Swiss franc from 0.8367 Swiss franc.