Euro rallies vs dollar

LONDON (AFP) - The euro bounced back above 1.56 dollars on Tuesday as new data showed that the eurozone economy grew at a faster than expected pace in the first quarter of the year, analysts said. In European trading, the euro rose to 1.5617 dollars from 1.5540 in New York late on Monday. Against the Japanese currency, the dollar fell to 104.06 yen from 104.52. Official data showed Tuesday that the economies of the 15 countries sharing the euro expanded by 0.8 percent in the first quarter of the year from the previous quarter, boosted by German momentum. The European Union's Eurostat data agency revised its previous estimate of 0.7pc gross domestic product (GDP) growth given last month. The figure was well above the 0.4-percent growth recorded in the last quarter of 2007. "The second estimate of first-quarter eurozone GDP provides further evidence that the region is still performing well compared to the US and UK," said Capital Economics analyst Jonathan Loynes. However, while the eurozone economy is performing relatively well, the European Central Bank remains concerned about inflation, analysts said. Dealers will focus Thursday on interest rate decisions from the European Central Bank and Bank of England, which are both forecast to keep their key lending rates at 4.0 percent and 5.0 percent respectively. Meanwhile on Tuesday, the US currency was on the back foot as fresh worries about the health of the US financial sector made investors more risk averse, dealers said. "The dollar overall remains weak following losses on Wall Street (on Monday) and market players shunned risk as worries over the credit crisis resurfaced," said Kenichi Yumoto, vice president of forex trading at Societe Generale. "Fears over the financial sector have become the hot topic again after being put on the backburner in recent weeks." Traders were concerned about a report in the Wall Street Journal that the US investment bank Lehman Brothers will report its first quarterly loss in its 158-year history and is considering raising billions of dollars in new capital. US shares skidded lower Monday after management shakeups at US banking giants Wachovia and Washington Mutual. The ratings agency Standard & Poor's meanwhile warned that banks could face further losses on US residential mortgage-backed investments. In London on Tuesday, the euro changed hands at 1.5617 dollars against 1.5540 late on Monday, at 162.50 yen (162.41), 0.7938 pounds (0.7899) and 1.6083 Swiss francs (1.6119). The dollar stood at 104.06 yen (104.52) and 1.0299 Swiss francs (1.0370). The pound was at 1.9675 dollars (1.9666). On the London Bullion Market, the price of gold advanced to 896.39 dollars per ounce from 888.25 dollars late on Monday.

ePaper - Nawaiwaqt