LONDON (AFP) - The euro fell sharply against the dollar on Monday after European Union leaders ruled out a regional bailout plan for Eastern Europe at a weekend summit, analysts said. The dollar also won support from sliding stock markets and downbeat eurozone manufacturing data ahead of a widely-expected interest rate cut later this week from the European Central Bank (ECB), they added. In late morning trading in London, the euro fell to 1.2603 dollars from 1.2671 late on Friday. Against the Japanese currency, the dollar sank to 97.21 yen from 97.65 yen on Friday. The market reacted with disappointment after European Union leaders stopped short of agreeing on a region-wide package to help Eastern Europe cope with the turmoil. "The failure of European leaders to act decisively to provide financial assistance to the region will weigh on the euro," said economist Lee Hardman at The Bank of Tokyo-Mitsubishi UFJ in London. The financial crisis has hit eastern and central European countries particularly hard because their economies are highly dependent on a steady stream of credit from Western sources that has all but dried up. EU leaders did however promise to assist any European Union member in need of help. The single currency was also pressured by expectations that the ECB will cut interest rates by 50 basis points to an all-time low of 1.5pc at a meeting this week, dealers said. In addition, dealers digested a survey showing that manufacturing activity in the 16 countries using the euro slumped slightly more than expected in February to hit the lowest level for eleven and a half years. Dealers also bought the dollar amid sliding world stock markets as fears mounted about the global financial crisis. The greenback often rises in times of turmoil as it is seen as a relatively safe investment. The euro was changing hands at 1.2603 dollars against 1.2671 dollars late on Friday, at 122.51 yen (123.78), 0.8874 pounds (0.8852) and 1.4800 Swiss francs (1.4831). The dollar stood at 97.21 yen (97.65) and 1.1742 Swiss francs (1.1701). The pound was at 1.4203 dollars (1.4310).