Euro Softens Versus Dollar Despite Lackluster US Growth Figures 

The euro remained on the defense against the dollar on Wednesday, even after official data showed the US economy grew slightly slower than expected in the third quarter.

Lingering concerns about sovereign debt on Europe's periphery continued to weigh on the single currency.

The euro weakened to $1.31, giving back its overnight gains in moving back toward a recent 3-month low near $1.2960.

The final reading on third quarter GDP showed the US economy grew a modest 2.6% from July through September.

The number was better than the 2.5% estimate given in November, but fell a bit short of economists expectations for 2.7% growth.

The GDP figures will likely overshadow the latest news on the beleaguered US housing market.

At 10.00 a.m. ET, the National Association of Realtors will release its report on existing home sales for November. Economists estimate existing home sales of 4.65 million for the month.

Simultaneously, the Federal House Finance Agency will release its house price index for the third quarter.

Earlier this morning, the Mortgage Bankers Association's Weekly Mortgage Applications Surveyshowed overall mortgage demand decreased 18.6 percent last week. Refinancing dropped sharply as interest rates edged higher.

The euro was able to hit a weekly high of 0.8510 against the sterling amid disappointing economic news from the UK.

Britain's economy expanded less than previously estimated as growth in the manufacturing, construction and services sectors was downwardly revised.

The Office for National Statistics on Wednesday lowered its economic growth estimate for the third quarter to 0.7% from the 0.8% growth estimated earlier.

Bank of England policy makers were conflicted about rates and bond purchases amid growing concerns about inflation, the minutes of their latest meeting revealed Wednesday.

The euro hit a 3-week low of Y109.40 against the yen, and a fresh record low of CHF 1.25 against theSwiss franc.

Euro Spirals Lower As Portugal, Spain Deny Bailout In The Works

The euro extended its losses Wednesday as officials from Spain and Portugal denied reports that theEuropean Union is pressuring them to work out a bailout.

Greece and Ireland have reluctantly accepted aid, but the EU is reportedly getting desperate to backstop the debt of the Iberian nations.

An article in FT Deutchland citing an unnamed source said majority of euro area countries and the European Central Bank are urging Lisbon to apply for a financial bailout from the European rescue fund.

It is hoped that a deal for Portugal would ease pressure on Spain, where banks are heavily exposed to Portugal. However, a spokesman for Portugal said the report was completely unfounded and that deep budget cut are in place.

Amid popular unrest aimed at derailing austerity measures, Portugal's government said Friday that the streamlined 2011 budget was approved by parliament.

Spanish Prime Minister Jose Luis Rodriguez Zapatero also rejected the notion that rescue was being negotiated for his country.

The prime minister, whose popularity is sagging following the announcement punishing austerity plans, said the government had undertaken strict reforms to trim the public deficit, and hit out at speculators who bet against the country.

Still, the euro fell further against the dollar, hitting a new 2-month low of $1.3199. Its been a brutal three weeks for the euro, which began November at a 10-month peak near $1.43.

The euro was stuck near last week's 2-month low of Y110.30 against the yen.

Against the sterling the euro hit a 2-month low of 0.8419 before improving to 0.8470.

German consumer price inflation rose to the highest level in more than two years, preliminary data from the Federal Statistical Office showed Friday. The consumer price index, or CPI, rose 1.5% year-on-year in November following the 1.3% increase in October.