July 8, 2003	Tuesday	Jumadi-ul-Awwal 7,1424

LONDON, July 7: The euro recoiled against the dollar to the lowest level for almost two months on Monday as dealers marked down the single currency over bleak euro-zone growth prospects, analysts said.

The single European currency fell to $1.1376 from $1.1498 in late European trading on Friday, when US markets were closed.

The dollar stood at 118.13 yen from 118.09 on Friday.

Given that the market is currently taking the view that economic growth rather than interest rate differentials are becoming once again more attractive, it’s not too surprising therefore to see the dollar moving higher versus the euro, said Michael Klawitter, economist at German bank WestLB.

The European Commission cast further gloom on prospects for the recovery in the 12-nation euro zone over the weekend.

EU Economic and Monetary Affairs Commissioner Pedro Solbes told a press conference in Gaeta, south of Rome, that the euro-zone was likely to grow by just 0.7 per cent in 2003, against a rate of 1.0 percent predicted earlier.

The euro was also under pressure against the yen as foreigners bought Japanese equities, while Japanese investment into euro-zone bonds slows, said Klawitter.

Prospects that the Japanese authorities might intervene in the market to weaken the yen — which boosts the competitiveness of local exports — supported the dollar against the Japanese unit, dealers in Tokyo said.

With little major US data on the calendar for this week, attention will likely focus on the US corporate earnings reports for the second quarter which kick off this week with results from the likes of General Electric, Alcoa and Yahoo.

Stocks start the week on an optimistic note with strong gains in Asian markets and on the overnight US futures, said Adam Cole, economist at Credit Agricole Indosuez.

If this continues the dollar should maintain a better tone, at least in the short term, he added.

Interest rate decisions from the European Central Bank (ECB) and the Bank of England, both on Thursday, will also be closely watched. While the British decision is seen as a close call, few expect any move from the ECB.

The euro was changing hands at $1.1376 from 1.1489 on Friday in London, 135.44 yen (135.68), 0.6876 pounds (0.6886) and 1.5495 Swiss francs (1.5492).

The dollar was being quoted at 118.13 yen (118.09) and 1.3516 Swiss francs (1.3485).

The pound was at $1.6675 (1.6688), 197.00 yen (197.05) and 2.2538 Swiss francs (2.2498).

On the London Bullion Market, the price of an ounce of gold stood at $351.25 from 351.30 on Friday afternoon. —AFP