European shares fell and the euro hit a one-week low against the dollar on Wednesday in the face of weak company earnings and deteriorating economic sentiment in the region. The euro slid after data on French business confidence came in unexpectedly weak. The euro's weakness depressed the euro zone government bond market which had begun trading slightly higher after a weaker than expected survey of German consumer sentiment. French business confidence dropped to an 18-month low in April, with the biggest decline seen in foreign orders and demand. "That's clearly bad news. Foreign orders especially keep falling. A euro around $1.30 is a handicap for the French economy. An exchange rate of $1.10 to $1.15 would be better for France," said Alexandre Bourgeois, economist at Natexis Banques Polulaires. The German GfK consumer sentiment survey for May fell to 4.9 from a downwardly revised 5.1 in April. The forward-looking indicator suggested sentiment would worsen in May in the euro zone's largest economy for the first time in eight months. The dollar firmed more than half a percent against the euro to around $1.2920, bolstered by surprise data on Tuesday showing new U.S. home sales hitting record levels. The dollar has risen more than 1.5 percent against the euro from one-month lows hit last week on renewed optimism about the U.S. economy. The dollar also rose to 106.25 yen , almost a full yen above one-month lows struck on Monday.