Exchange traded funds pegged to the euro and U.S. stocks were set for a lower open Thursday following a disappointing government bond auction in France.

The euro slipped nearly 1% against the dollar to under $1.29.

In premarket trading, SPDR S&P 500 (NYSEArca: SPY) declined 0.7%.

The euro fell to its lowest level versus the U.S. dollar in 16 months as investors continue to fret over Europe’s banks, BBC News reported.

UniCredit and Societe Generale paced the declines in the European financial sector.

Demand in the latest French auction weakened while the country was forced to pay higher rates on 10-year notes.