LONDON, Aug 1: The euro fell to a three week low against the dollar on Thursday after economic data underscored the fragility of the euro-zone economies.

The single European currency slipped to $0.9734 from 0.9775 on Wednesday evening.

The dollar firmed to 119.92 yen from 119.83 on Wednesday.

Dealers were waiting for the interest rate decision of the European Central Bank, whose policymakers were expected to leave interest rates unchanged later Thursday.

The euro fell after the French national statistics institute INSEE said French consumer confidence had plunged in July, as a composite sentiment index fell to minus-17 from minus-13 in June.

All the components of the monthly index were lower in July, INSEE said. The index had fallen back to its April level.

INSEE also said that retail sales in France were down sharply in May and June to levels seen nearly three years ago.

But the effect was offset somewhat by a euro-zone manufacturing sector purchasing managers’ index, which fell to smaller-than-expected a seasonally adjusted 51.6 in July from 51.8 in June, according to a monthly Reuters/NTC survey.

A reading above 50 indicates that the manufacturing sector is generally expanding, while a reading below 50 suggests that it is generally contracting.

The survey said that while the July figure showed an expansion for the fourth month running, the decline from June’s 16-month high signalled an easing in the pace of improvement to the weakest since May.

Nevertheless, although growing at only a modest pace, the continued expansion of euro zone manufacturing represents a significant contrast to the survey record pace of deterioration seen last October, it said.

Sharda Dean, economist at Merrill Lynch financial, said: These strong-ish figures are something of a surprise given the weaker strain of most of the recent euro area figures.

He said the most dramatic of the component readings was the 1.3-point rise in the prices index, adding that this was likely to unwind in the coming months with the effects of the strong euro on import prices.

All in all, the manufacturing (indices) are good news for the economic recovery, but fly in the face of recent weakness elsewhere, such as the Ifo, said Dean.

He was referring to the business climate index calculated each month by the Ifo economics research institute in Munich, which fell to its lowest level since February in July.

The euro was changing hands at 0.9734 dollars against 0.9775 on Wednesday, 116.81 yen (117.16), 0.6275 pounds (0.6249) and 1.4521 Swiss francs (1.4517).

The dollar was being quoted at 119.92 yen (119.83) and 1.4906 Swiss francs (1.4847).

The pound was at 1.5522 dollars (1.5637), 186.18 yen (187.42) and 2.3137 Swiss francs (2.3222).

On the London Bullion Market, an ounce of gold fell to $303.10 from 305.80 late on Tuesday.—AFP