Sept. 19 (Bloomberg) -- The euro weakened to almost a seven-month low against the dollar after European officials failed last week to offer a plan to halt the region's debt crisis as Greece struggles to avoid default.

The 17-nation currency pared losses against its major counterparts after the Greek Finance Ministry said a conference call with the European Union and International Monetary Fund was productive. The dollar rose against all its major counterparts except the yen as Treasury two-year yields fell to a record before the Federal Reserve begins its two-day meeting tomorrow. Norway's krone fell as oil prices declined.

"The Greek government is trying to do what it's being asked to do and my core case is that we get a disbursement of the quarterly tranche, but that doesn't mean we won't have the same issue in December," said Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc. Nordvig spoke on a Bloomberg Television interview with Carol Massar and Matt Miller on "Street Smart."

The euro depreciated 0.8 percent to $1.3688 at 4:02 p.m. in New York, after falling as much as 1.5 percent. It touched $1.3495 on Sept. 12, the least since February.

The shared currency weakened 1.1 percent to 104.76 yen, after sliding to 103.90 on Sept. 12, the lowest level since June 2001. The yen rose 0.3 percent to 76.54 per dollar. It reached record strength of 75.95 on Aug. 19, spurring the Bank of Japan to sell 4.51 trillion yen ($59 billion) in the currency market during August, the nation's biggest currency intervention in seven years.

'Risk Aversion'

"The yen is catching up on the risk-aversion flows that we're seeing today with the Dow Jones Industrial Average down 200 points," said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. "People are trying to probe and see how serious the BOJ is about defending the levels. If dollar-yen comes near the 75 level that's where we think the BOJ will intervene."

Japan may outline measures to counter the strong yen as early as tomorrow, Economic Policy Minister Motohisa Furukawa signaled in remarks yesterday, Kyodo News reported. The package will be aimed at reducing the impact of the currency's gains on local businesses, according to the report.

The yen has risen 8 percent in the past three months, the best performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar, the third best, has advanced 2.7 percent.

Greek Review

Greek Finance Minister Evangelos Venizelos held a conference call with the heads of the EU and IMF mission to Athens. The country is struggling to convince critics that it will be able to win a sixth tranche of loans to prevent default.

The call was "productive and substantive," the Finance Ministry said in an e-mailed statement. The talks will continue in another teleconference tomorrow evening, the statement said.

After a two-day meeting of EU finance ministers and central bankers ended Sept. 17 German Finance Minister Wolfgang Schaeuble and Bundesbank President Jens Weidmann rejected using the European Central Bank to boost the euro-area rescue fund's firepower. "We don't think that real economic and social problems can be solved by means of monetary policy," Schaeuble told reporters. "That has never been the European model and it won't be."

"The comments are worrisome in the sense that it has really been the ECB that has provided some stability to the euro-zone bond markets through the bond buying program," said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. "There are limits, but that has done more to support the bond markets and the euro than the politicians have done and the other EU initiatives."

Technical Weakness

The euro's gain last week against the dollar won't last and the currency may depreciate to $1.3150, a level last reached in January, Citigroup Inc. said, citing technical indicators. The 17-nation currency rose 1 percent last week.

The euro's seven-day relative strength index versus the dollar fell below 30 for the first time in four days. A reading below that level indicates an asset may have fallen too quickly and may be due to rebound.

The dollar also rallied as investors bought the nation's debt as a refuge amid stock declines. The Treasury two-year yield fell to a record of 0.1451 percent. The Standard & Poor's 500 Index declined 1 percent.

The Dollar Index, which tracks the U.S. currency against those of six major trading partners including the euro, yen and pound, advanced 0.6 percent to 77.065.

Fed Meets

The Federal Open Market Committee may decide to replace some of the short-term Treasuries in the central bank's $1.65 trillion portfolio with longer-maturity debt in a bid to lower borrowing costs, according to economists at Wells Fargo & Co., Barclays Plc and Goldman Sachs Group Inc. Some analysts dub the maneuver Operation Twist because it would bend long-term yields lower.

"The operations at the Fed are likely to be less accommodative than some policies they've pursued previously," said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York. "Operation Twist is much less bearish for the dollar because you're not changing the size of the balance sheet."

Futures traders increased bets the euro will weaken against the dollar to the highest since July 2010, figures from the Washington-based Commodity Futures Trading Commission show.

Norway's krone was the third-worst performer against the dollar today as crude oil fell as much as 1.8 percent to $86.35 a barrel in New York, the lowest in a week.

The krone dropped 1.9 percent to 5.6802 per dollar from 5.5738. It declined 1.1 percent to 7.7747 versus the euro, from 7.6894.

Brazil's real touched the weakest level in more than a year as concern Greece is headed for a default sapped demand for higher-yielding assets.

The real declined 2.6 percent to 1.7916 per dollar. It earlier touched 1.7994, the lowest since July 20, 2010. The currency has lost 11 percent this month.