LONDON, Sept 18: The dollar fell against the euro on Thursday on investor nervousness in the face of persistent turmoil in the US financial markets and concern over the health of its banking system.

The single European currency in late-day deals was at $1.4381 against $1.4323 late Wednesday in New York.

The US unit was meanwhile at 104.92 yen, up from 104.56 on Wednesday.

The dollar has been weakening for the last seven days in reaction to major upheavals in the US banking and insurance sectors that have prompted controversial and costly US government intervention.

In its latest, move the US Federal Reserve on Thursday joined central banks around the world to provide more than $300 billion to keep credit flowing through jittery global money markets.

Merrill Lynch analysts said continuing unrest on US markets posed a dilemma for investors.

They said the implications of “financial market uncertainty” in the United States were unclear. The dollar’s “role as a safe haven needs to be balanced against the weaker US financial sector outlook and lower yields.”

In troubled economic circumstances investors traditionally prefer the US currency as a refuge from stress but the dollar’s safe-haven status could be jeopardised the longer the US financial sector crisis goes on.

“With the carnage in the markets, the real dilemma ... is gauging whether to sell the dollar, given the US-centric nature of these fears for now, or to buy the dollar on expectations of repatriation,” said Daragh Maher of Calyon.

French bank BNP Paribas said the “safe-haven function of the dollar has been called into question, allowing sterling and the euro to re-trace some of their recent losses.” In London trading on Thursday, the euro changed hands at $1.4381 against $1.4323 late Wednesday, at 150.76 yen (149.78), 0.7908 pounds (0.7879) and 1.5794 Swiss francs (1.5798).

The dollar stood at 104.92 yen (104.56) and 1.0993 Swiss francs (1.1027).

The pound was at $1.8186 ($1.8176).—AFP