LONDON, March 24: The dollar dropped against other major currencies on Monday as dealers absorbed a string of reverses for US and British forces in Iraq that sparked fears the conflict could drag on longer than anticipated.

The euro rose strongly to 1.0646 dollars in European trading from 1.0524 late on Friday in New York.

The dollar slipped against the yen to 120.66 from 121.67 on Friday.

The dollar slid lower against major currencies as news on the military progress in Iraq continued to filter through, dealers said.

They said stubborn “pockets of opposition” in Iraq weighed on the dollar amid thin trading volumes.

“The markets will stay fixed in a state of high anxiety, but with a positive bias, hoping that war will be of short duration without too much collateral fall-out, especially as forces approach Baghdad,” said David Brown, economist at Bear Stearns.

Bear Stearns analysts noted that market reaction, so far, showed safe haven switches going into reverse - with markets starting to discount the likely economic impact once the war is over.

The euro was changing hands at 1.0646 dollars from 1.0524 late on Friday in New York, 128.46 yen (128.04), 0.6761 pounds (0.6732) and 1.4737 Swiss francs (1.4755).

The dollar was being quoted at 120.66 yen (121.67) and 1.3847 Swiss francs (1.4020).

The pound was at 1.5747 dollars (1.5623), 189.99 yen (190.09) and 2.1806 Swiss francs (2.1903).—AFP