The euro rose to its strongest level against the dollar in 11 months as the European Central Bank said banks will hand back a greater amount of three-year loans than analysts estimated, boosting short-term borrowing costs.

The shared currency gained for a seventh week against the yen as the ECB said 278 banks will repay 137.2 billion euros ($184.4 billion) next week, versus an 84 billion-euro forecast in a survey. The yen headed for a record weekly losing streak versus the dollar as Japan’s consumer prices fell. The two-year interest-rate swap spread between the euro and dollar, a key lending rate, increased to the widest in six months.

The yen fell as the government said consumer prices excluding fresh food fell 0.2 percent in December from a year earlier. The central bank announced open-ended asset purchases and a 2 percent inflation target this week. The yen pared losses after government data showed purchases of new U.S. homes unexpectedly fell in December, damping demand for riskier assets. The purchases slid 7.3 percent to a 369,000 annual pace, versus a survey forecast of 385,000.

Pound weakened for a second day against the euro, falling to 13-month low after a report showed that the UK economy shrunk in the fourth quarter than analysts had forecast. Sterling fell to the lowest level in five months against the dollar, as the reduction in the UK has put on the brink of an unprecedented triple recession. According to the report, the gross domestic product declined in the fourth quarter by 0.3%, changing the increase of 0.9% in the third quarter, which was mainly due to increased activity during the Olympics. Note that the projected decline economists should have been 0.1%. Compared with the fourth quarter of 2011, GDP was unchanged, as it was in the third quarter, although the experts forecast an increase of 0.2%.