LONDON, Aug 1: The euro stabilised against the dollar on Wednesday after two US economic indicators came in weaker than expected. In late European deals the euro was changing hands at $1.3679, against $1.3683 late on Tuesday in New York.

The dollar was stable at 118.64 yen, after the Japanese currency earlier hit a four-month high against the greenback of 117.61 yen as growing problems in the US housing market prompted investors to abandon risky positions, dealers said.

The dollar edged back up against the euro after weaker than expected ADP employment and ISM manufacturing reports in the United States.

The ADP national employment report showed US companies added 48,000 jobs in July, far lower than the 100,000 expected by analysts and suggesting that key non-farm payrolls data on Friday will fall short of the 135,000 predicted.

“The ADP report has been quite volatile for some time, and has a tendency to underestimate the growth in the number of jobs, but we have nevertheless revised our prognostic for the creation of official jobs to 110,000 instead of 135,000,” an economist at Lehman Brothers said.

Ashraf Laidi, an economist at CMC Markets also described the data as “disappointing”.

Later, the closely-watched US ISM index of manufacturing activity showed a drop to 53.8 per cent in July from 56.0 per cent, well below forecasts for an unchanged reading.

The dollar had recently benefited from fears that problems in the US housing market will affect the world economy, prompting investors to abandon risky positions.

“Risk aversion returned to financial markets as fresh credit woes became apparent, leading to the yen and Swiss franc rallying at the expense of high yielding currencies such as British pound, Australian dollar and New Zealand dollar,” said ABN Amro currency analyst Melinda Smith.

“The US subprime woes are clearing showing signs of spilling over into the global credit market, with the American Home Mortgage Investment Corporation saying that it does not have the cash to fund new loans and may have to sell off assets.”—AFP