The euro hit its lowest level in more than three months as the electoral defeat of ruling parties in France and Greece stoked fears about the fate of austerity policies aimed at ending the eurozone debt crisis. The single currency was changing hands at $1.2973 in morning trade, down from $1.3082 on Friday in New York, while the unit also fell against the Japanese currency, dropping to 103.57 yen from 104.50 yen on Friday. At one stage, the euro dipped to $1.2954, its weakest since late January, while also slumping to 103.22 yen. Tokyo stocks dropped 2.60 per cent in morning trade after Socialist Francois Hollande beat incumbent Nicolas Sarkozy. Analysts said Hollande\'s victory underscored the politically difficult task of selling austerity measures designed to tackle eurozone nations\' huge debts, with Hollande advocating economic growth over deep public spending cuts. \"The Hollande win in France is not necessarily a surprise. However it  brings home the reality that incumbents following the (European Union\'s) prescribed austerity measures are going to find it difficult to remain elected,\" National Australia Bank said in a note. \"What happens to these austerity measures now are what are weighing on (the euro),\" the bank said. In the run-up to the French election, the campaign was dominated by a debate over whether austerity measures demanded by Germany or the growth pushed by Hollande was the best way to help the eurozone out of its debt hole. Hollande criticised Chancellor Angela Merkel\'s insistence that deep cuts were the way out of the crisis, while the German leader had publicly backed fellow conservative Sarkozy. \"With the growing influence of anti-austerity political blocs, tensions among the eurozone will likely be intensified and a wave of renegotiations for bailout programmes may be sparked,\" Kintai Cheung, analyst at Credit Agricole, said in a note. Greek voters meanwhile showed displeasure at belt tightening, dousing hopes that Athens will stick to its austerity pledges as parties opposing more cuts won almost 60.0 percent support in a general election Sunday. The two main parties suffered heavy losses, with the conservative New Democracy and the left-wing Pasok getting just 32.0 to 34.5 per cent between them, down from 77.4 per cent at the last polls in 2009. New Democracy, led by Antonis Samaras, remained the largest party but it fell short of an absolute majority in parliament. \"Greece\'s elections may prove the more unstable, with the possibility of another in the near future,\" National Australia Bank said in its research note. \"As it stands there is no clear winner, but there are likely to be calls to ease up on the austerity reforms,\" it added. Also Sunday, Merkel\'s Christian Democrats grabbed only about 30.0 percent of the vote in polls for the small state of Schleswig-Holstein, a setback ahead of national elections in 2013. Adding to concern over the 17-nation eurozone, private-sector activity fell sharply in April, with even powerhouse Germany grinding to a halt as the bloc\'s weaker southern members struggled to keep their economies humming.     The Purchasing Managers\' Index (PMI) compiled by London-based research firm Markit fell to 46.7 points in April, well below an initial 47.4 estimate. Anything below 50 is considered contraction. The report, released last week, raised fears that the eurozone might suffer from a longer recession than initially forecast, while concerns about an economic recovery in the United States also weighed. The US unemployment rate dropped from 8.2 per cent from 8.1 per cent in April, but the economy created only a net 115,000 jobs last month, which was below market expectations.