LONDON, July 7: The dollar fell to its lowest level against the euro for three months on Wednesday, amid rising fears about a slowdown in the US economy in the wake of soft economic data and unease over earnings reports, analysts said.

The single European currency climbed to $1.2359 in early European trading against 1.2319 late on Tuesday in New York. The dollar rose to 108.53 yen from 108.31 on Tuesday. The euro had jumped to $1.2371 in early European trading on Wednesday, its highest level since April 2.

The tone of dollar weakness was set last Friday after the release of a weak employment report from the US and there is little on the immediate horizon to change that sentiment and hence gradual dollar depreciation looks set to continue, Bank of Tokyo-Mitsubishi economist Derek Halpenny said.

On Tuesday in the United States, the Institute for Supply Management (ISM) purchasing managers' index slumped below predictions to 59.9 points in June from 65.2 in May, although component indices told a different story.

The breakdown showed new orders rising at a faster pace and the employment index at 57.4 from 56.3, a new record for the survey, which began in July 1997. Input prices rose for the 27th month, also a record.

But markets were voicing concern about the state of US equity markets following profits warnings from broadband chipmaker Conexant Systems and software maker Veritas on Tuesday.

Dealers were expected to cast a close eye on the release of an earnings report from Internet portal giant Yahoo later Wednesday. WestLB currency strategist Michael Klawitter warned, however, that even positive earnings data might not be enough to push equities higher and in turn boost the dollar.

In this environment, dollar sentiment is unlikely to improve and risks remain to the downside, he said. The euro was changing hands at $1.2359 from 1.2319 late on Tuesday in New York, 134.07 yen (133.40), 0.6683 pounds (0.6716) and 1.5185 Swiss francs (1.5180).

The dollar stood at 108.53 yen (108.31) and 1.2290 Swiss francs (1.2325). The pound was at $1.8492 (1.8341), 200.68 yen (198.63) and 2.2723 Swiss francs (2.2610). On the London Bullion Market, the price of an ounce of gold stood at $396.85 from $394.50 late on Tuesday. -AFP