LONDON, Sept 4: The euro sank to its lowest level against the dollar this year on Thursday after the European Central Bank cut its eurozone growth forecasts, adding to gloom surrounding the European economy.

In late European trading, the euro was trading at 1.4366 dollars against 1.4492 late on Wednesday. The European single currency hit its lowest level since Dec 21 of 1.4326 dollars earlier in the afternoon.

The dollar fell against the Japanese currency to 154.75 yen from 156.92 on Wednesday, but rose to a two-and-a-half-year high against the British pound.

“There’s definitely an air of panic surrounding the health of national economies,” said an analyst at CMC Markets, James Hughes.

British finance minister Alastair Darling said at the weekend that Britain was arguably facing its worst economic downturn in 60 years.

Both the European Central Bank and the Bank of England announced on Thursday that they had kept their key lending rates unchanged at 4.25 per cent and 5.00 per cent, respectively.

The decisions were widely expected, but comments by ECB president Jean-Claude Trichet moved the market afterwards.

He said the central bank had cut its 2008 growth forecast to 1.4 per cent from 1.8 per cent previously, and estimated growth next year at 1.2 per cent, compared with its earlier outlook of 1.5 per cent.

In late London trading on Thursday, the euro changed hands at 1.4366 dollars against 1.4492 late on Wednesday, at 154.75 yen (156.92), 0.8117 pounds (0.8154) and 1.5936 Swiss francs (1.6032).

The dollar stood at 107.78 yen (108.27) and 1.1098 Swiss francs (1.1061).

The pound was at 1.7689 dollars (1.7767).

On the London Bullion Market, the price of gold rose to 805.75 dollars per ounce from 803.50 dollars late on Wednesday.—AFP