The euro fell to its lowest level in 11 months Tuesday, as traders remained wary about Europe’s debt crisis.

The currency was trading at $1.3029 US late in the day, down 1.2 per cent.

Traders sold the 17-nation currency and moved into the U.S. dollar after Bloomberg reported that German chancellor Angela Merkel told German lawmakers that there would be no increase in Europe’s $672 billion Cdn planned permanent bailout fund.

That was actually old news, but traders had been hoping the fund would be increased, after last week’s EU summit, when leaders agreed to tighten rules against government spending in an attempt to contain the debt crisis.

The Canadian dollar turned lower too, closing down 0.79 of a cent at 96.69 cents US.

Investors also were rattled by news that European commercial banks are leaving more money than they have all year at the European Central Bank rather than lending it to other banks, a signal of distress in the financial system.

With files from The Associated Press