Euro drops to new four-year low against US dollar

The euro has plummeted against the US dollar, falling below $1.22 for the first time since April 2006.

The eurozone's single currency fell more than 1.7% in afternoon trading in New York, to $1.216, before rallying.

The decline came after Germany announced plans to ban naked short-selling of shares from midnight local time (2200 GMT).

The single currency dropped by more than 2% against the yen.

Traders fear that the austerity measures being put in place in many eurozone countries will hit growth.

Despite the huge sums of money pledged in support for eurozone countries, severe measures are needed to cut budget deficits and debt.

The German government's ban will apply to the country's 10 most important financial institutions, and aims to stop the short-selling of euro government bonds.

Short-sellers usually borrow shares, sell them, then buy them back when the stock falls and return them to the lender, keeping the difference in price.

"Naked" short selling is when sellers do not even borrow the shares.