Euro crashes with Merkel's fourth term as chancellor in doubt

The European currency plunged to a two-month low against the yen on news that in Germany the pro-business Free Democrats (FDP) have pulled out of four-week negotiations with Chancellor Angela Merkel's conservative bloc and the ecologist Greens.

With the failure to form a new coalition, Merkel's fourth term as Germany's chancellor is now in doubt. Her party has tried for four weeks to enlist the two smaller parties for her coalition.

"It's better not to govern than to govern badly," FDP head Christian Lindner told reporters in Berlin.

By 9:30am GMT, the European currency recovered but failed to ease worries on the financial markets.

"It's very concerning, and creates this big uncertainty in the eurozone," said Kisoo Park, a global bond manager at Manulife Asset Management in Hong Kong, as quoted by the Dow Jones Newswires. The financier...