The dollar rose against the euro Tuesday for the second day in a row as borrowing costs in Italy, Spain and France jumped, stoking fears that Europe's debt crisis may spread to other countries.
Higher borrowing costs are a sign that investors are worried that those countries may have trouble paying their debts. The yield on Italy's 10-year bond jumped above 7 percent again Tuesday, a level widely seen as unsustainable.
Greece, Portugal and Ireland were forced to get financial lifelines after their borrowing rates rose above 7 percent. Unlike those countries, however, Italy is widely seen as too large to be bailed out by its European neighbors.
The yields on 10-year bonds for Spain and France also rose Tuesday, although both were still below 7 percent. The increase is raising fears that more countries may be sucked into Europe's debt crisis.
The euro fell to $1.3543 in late trading Tuesday from $1.3616 late Monday.
In other trading, the British pound fell to $1.5834 from $1.5898. The dollar rose to 0.9149 Swiss franc from 0.9076 Swiss franc and to 1.0200 Canadian dollar from 1.0174 Canadian dollar. It fell to 77.04 Japanese yen from 77.12 Japanese yen.