August 22, 2003	Friday	Jumadi-us-Sani 23, 1424

LONDON, Aug 21: The euro dipped under the symbolic 1.1-dollar mark for the first time in almost four months on Thursday after bad news from the French and German economies put the currency under pressure from both fronts.

The euro was at $1.1014 from 1.1118 late Wednesday in New York, having dipped to 1.0986 earlier in the day, its first descent below $1.1 since April 29.

The dollar traded at 118.04 yen from 118.10 on Wednesday.

Traders were exiting the euro at a rapid rate in the wake of statistics showing that both the French and German economies had shrunk in the second quarter of 2003, placing any imminent recovery in the sluggish euro-zone into severe doubt.

France’s economy contracted 0.3 percent in the April to June quarter against the previous three months, the national statistics institute said on Wednesday, also forecasting that full-year growth would be a snail-paced 0.1 percent.

Meanwhile on Thursday morning, the German Federal Statistics Office confirmed a 0.1 per cent shrinkage in the 12-nation euro-zone’s biggest economy over the same period.

It is likely that the economy of the euro-zone as a whole contracted in the second quarter of 2003 for the first time.

The market seems to be focusing on poor conditions in the euro-zone it is in a sharp contrast to the improving conditions in the US.

The US economy has shown increasing signs of life in recent months, with the country’s gross domestic product (GDP) rising 2.4 per cent in the second quarter of 2003.

The euro was changing hands at $1.1014 from 1.1118 late on Wednesday in New York, 129.91 yen (131.31), 0.6941 pounds (0.6972) and 1.5418 Swiss francs (1.5428).

The dollar was being quoted at 118.04 yen (118.10) and 1.4009 Swiss francs (1.3878).

The pound was at $1.5859 (1.5937), 187.18 yen (188.25) and 2.2214 Swiss francs (2.2121).

On the London Bullion Market, the price of an ounce of gold stood at $364.25 from 363.70 on Wednesday afternoon. —AFP