Euro slips back under $1.50

LONDON: The European single currency dropped back below the key level of 1.50 dollars on Thursday after Chinese economic growth data failed to meet some investors' high expectations, dealers said.

In London morning deals, the euro fell to 1.4963 dollars, from 1.5016 dollars late in New York on Wednesday, when it had touched 1.5046 -- the highest level since August 11, 2008.

Against the Japanese currency on Thursday, the dollar firmed to 91.34 yen from 90.96 yen late on Wednesday.

The European currency dropped after official data showed the Chinese economy grew at an 8.9 percent year-on-year pace in the third quarter -- a strong performance but slightly weaker than the market had been expecting.

"The euro-selling was a classic case of 'buy on the rumour, sell on the fact'," Yuji Saito, head of the foreign exchange group at Societe Generale in Tokyo, told Dow Jones Newswires.

Many market players had speculated that the Chinese figures might produce a positive surprise that would boost the risk-sensitive euro, he said.

The dollar has been suffering recently from the near-zero interest rate policy of the US Federal Reserve.

Analysts say this fuels the so-called "carry trade" in which investors borrow in dollars to invest in higher-yielding assets.

The euro also fell back under 1.50 dollars as the foreign exchange market digested a downbeat assessment from the US Federal Reserve, the so-called "Beige Book" economic report.

"Yesterday (Wednesday) afternoon we finally saw a breach of 1.50 dollars; however it did not last long as the Fed beige book release brought a sense of reality back into the markets," said CurrenciesDirect analyst Phil McHugh.

"The disappointing feedback from the Fed Beige Book which offers a survey of economic conditions led to a dip in the Dow and some strength coming back into the dollar in later trading."

The US economy is showing more signs of firming but improvements are "small or scattered," the US central bank said in its Beige Book survey of current conditions.

The economy is being held back by troubles in commercial real estate, offsetting improvement in the residential sector, and by "weak or mixed" job market conditions, said the report.

The report said that "labour markets were typically characterised as weak or mixed, but with occasional pockets of improvement."

It also cited ongoing woes in the financial sector, with soft or declining demand for loans in many regions.

In London on Thursday, the euro was changing hands at 1.4963 dollars against 1.5016 dollars late on Wednesday, at 136.58 yen (136.60), 0.9065 pounds (0.9040) and 1.5124 Swiss francs (1.5104).

The dollar stood at 91.34 yen (90.96) and 1.0115 Swiss francs (1.0058).

The pound was at 1.6495 dollars (1.6605).

On the London Bullion Market, the price of gold firmed to 1,054.80 dollars an ounce from 1,053.75 dollars an ounce late on Wednesday.