Asian currencies fell to the lowest level of the year on lingering doubts whether Europe will succeed in containing its debt crisis, a concern that’s prompted overseas investors to cut holdings of regional stocks.

Funds based abroad withdrew $1.1 billion from equity markets in Taiwan, South Korea, Indonesia and Thailand in the first three days of this week, exchange data show. Chinese leaders pledged yesterday to intensify “fine-tuning” of policies, signaling a commitment to economic growth as domestic demand slows and European officials try to ensure Greece doesn’t exit the euro.

“Lingering concerns about Greece and Europe’s debt problem are making investors stay away from riskier assets,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Asian currencies are under growing pressure to depreciate.”

Indonesia’s rupiah dropped 1.7 percent to 9,416 per dollar as of 3:56 p.m. in Jakarta and reached 9,421, the lowest level since February 2010, according to prices from local banks compiled by Bloomberg. The Philippine peso fell 0.7 percent to 43.740, South Korea’s won weakened 0.6 percent to 1,180.05, and Thailand’s baht declined 0.4 percent to 31.65. The Bloomberg- JPMorgan Asia Dollar Index touched 114.24 today, the lowest level since Dec. 15.

China’s manufacturing may shrink for a seventh month in May, as a purchasing managers’ index compiled by HSBC Holdings Plc and Markit Economics showed a preliminary reading of 48.7 today, compared with 49.3 for April. A level of 50 is the dividing line between expansion and contraction.

Europe Crisis

Malaysia reported yesterday that economic growth slowed to 4.7 percent in the first quarter, the least since the three months ended June 2011, as the European debt crisis sapped demand for exports. The ringgit lost 0.2 percent to 3.1540 per dollar in Kuala Lumpur, and reached 3.1576 today, the weakest level since Jan. 9.

German Chancellor Angela Merkel said yesterday that the nation was still opposed to jointly issuing euro bonds after leaders met during a European Union summit, at which officials aired contrasting views on how to overcome the debt crisis. “We want Greece to remain in the euro area while respecting its commitments” to deficit-cutting measures, according to a statement.

Reports out of Europe today showed business confidence in Germany fell more than economists’ forecast and sentiment in France dropped for a second month. European services and manufacturing industries also declined more than analysts predicted.

Korea’s Stocks Sales

The won reached a seven-month low of 1,180.08 per dollar as overseas funds sold more of the nation’s stocks than they bought for a 17th day.

“Speculation that the summit may disappoint is putting downward pressure on the won,” said Jeon Seung Ji, a Seoul- based foreign-exchange analyst at Samsung Futures Inc. “Currency movements may change depending on the summit results to be announced, and also players shorting the euro and buying the won may limit losses.” A short position is a bet that an asset will decline.

Elsewhere, China’s yuan fell 0.16 percent to 6.3447 against the U.S. currency, while Taiwan’s dollar slipped 0.2 percent to NT$29.645. India’s rupee lost 0.4 percent to 56.2425 and Vietnam’s dong declined 0.1 percent to 20,868.

To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Yumi Teso in Bangkok at yteso1@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net