LONDON, Dec 4: The euro held above parity against the dollar on Wednesday after Wall Street chalked up heavy losses overnight, on growing expectations that an expected cut in euro-zone interest rates might boost the economy.

The single European currency rose to $1.0014 from 0.9963 late on Tuesday in New York.

The dollar was being traded at 124.67 yen against 124.55 late on Tuesday.

We saw Wall Street falling back and the reaction of US stock markets continues to be a driver of the dollar, said Commerzbank equity strategist Kamal Sharma.

The Dow Jones industrials fell 1.4 per cent Tuesday while the tech-rich Nasdaq composite lost 2.4 per cent.

And futures contracts indicated US stocks were in for another rough ride when trading resumed later after Hewlett-Packard cut its revenue-growth forecast for the current financial year to 2-4 per cent from 4-6 per cent previously.

Sharma added the earlier release of a batch of weak economic data for the euro zone’s leading economy Germany had not dampened sentiment towards the single currency.

The German labour office said the country’s jobless total rose by 35,000 in November, when adjusted for seasonal factors, pushing the unadjusted total up to 4.03 million, or 9.7 per cent of the workforce.

Data released separately showed German retail sales fell 0.7 per cent in October from the previous month and were 1.1 per cent below last October’s level.

Perversely, what may be happening is that the weaker the numbers the more the euro is being buoyed by the growing prospect that the European Central Bank (ECB) may actually cut rates by 50 (basis points), he told AFP.

But WestLB analyst Michael Klawitter said there was a risk supporters of the euro were left disappionted by the ECB.

Having considered all arguments, we see more support for a smaller 25 basis point move, he said.

Klawitter added that such a move would undoubtedly disappoint markets, where expectations are heavily biased toward a 50 basis point cut.

The euro was changing hands at $1.0014 from 0.9963 late on Tuesday in New York, 124.83 yen (124.12), 0.6369 pounds (0.6343) and 1.4721 Swiss francs (1.4723).

The dollar was being quoted at 124.67 yen (124.55) and 1.4703 Swiss francs (1.4774).

The pound was at $1.5723 (1.5701), 196.01 yen (195.60) and 2.3117 Swiss francs (2.3202).

On the London Bullion Market, the price of an ounce of gold rose to $320.15 from 319.70 late on Tuesday. —AFP