LONDON, Sept 30: The dollar rose sharply against the euro as investors sought out a safe haven after the global financial system was shaken by US Congressional rejection of a 700-billion-dollar Wall Street bailout.

The single European currency in late-day trade was at 1.4080 dollars, down sharply from 1.4432 dollars on Monday

The dollar also rose to 105.89 yen from 104.03 late Monday.

Commerzbank analyst Ulrich Leuchtmann said that at times of stress “investors tend to shove their money into the safest alternative they can find and many people still regard US Treasury bills, notes and bonds as the safest investment on earth.

“Any extreme upshot in risk aversion, therefore, causes capital inflows into the United States and thus a rising demand for dollars.” Earlier on Tuesday, stock markets around the world were stunned by an unexpected vote in the US House of Representatives against a rescue plan for troubled US banks, an initiative its backers insisted was critical to preserve global economic and financial stability.Markets later rebounded after President George W. Bush, under pressure from world leaders to act, vowed to press ahead with the plan, with another vote likely before the end of the week.

Leuctmann said the euro is not seen as a safe haven because “Europe has proven not to be immune to the latest round of the financial crisis.

“Eurozone government securities hardly are a substitute for US Treasuries.”—AFP