The euro fell against the dollar yesterday after Germany reported a plunge in industrial and construction output while the Swiss franc weakened following a cut in interest rates in Switzerland.

Europe's single currency was changing hands at $1.2810 in late trade in London compared to $1.2842 late last Wednesday.

The euro meanwhile gained against the Japanese yen after more gloomy data on Japan's recession, rising to 125.19 yen compared to 124.94 yen on Wednesday.

The dollar also rose to 97.95 yen from 97.29 yen last Wednesday.

The main factor dragging down the euro, traders said, was a 7.5 per cent drop in German industrial and construction output in January from December - the worst performance for the Europe's biggest economy in nearly 20 years. Germany's Commerzbank said the data - described as "breathtaking by one analyst - "should add to the view that the downward momentum in eurozone GDP (gross domestic product) is still accelerating."

French bank BNP Paribas said in a statement: "This negative data from Germany and the continued lack of coordination going into the G20 meeting... may take their toll on the euro today."

Deep splits have emerged ahead of a G20 finance ministerial meeting near London on Saturday, with the United States urging more spending on stimulus plans by other G20 countries and European nations putting their foot down.

Adding to the market movements, European Central Bank chief Jean-Claude Trichet reiterated comments that the ECB could cut interest rates in the eurozone again after slashing them by 0.50 per cent last week.

Switzerland's central bank cut its key interest rate yesterday by a quarter point to a range of zero to 0.75 per cent, matching a historic low in a bid to counter a sharper than forecast recession.

The Swiss National Bank's report also showed that Switzerland's economy was threatened by sustained deflation, which could harm the bank's target of price stability, as well as the strength of the Swiss franc.