Euro hits new low against dollar

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STOCK MARKETS in London and New York hit new highs yesterday while the euro hit another new low against the dollar, highlighting the financial markets' diverging expectations for their economies.

The European currency fell after figures showed German unemployment rose in June. The markets ignored efforts by Christian Noyer, vice president of the European Central Bank, to talk the euro up. The FTSE 100 closed at a record high, driven by recent rises on Wall Street and takeover speculation. Later, the Dow Jones soared into record territory as dealers returned from a three-day holiday.

The euro was hit by figures showing a 15,000 rise in the number unemployed in Germany last month, despite a growing belief that Europe's biggest economy has passed the low point in its cycle. It fell briefly to $1.0184, its lowest so far against the dollar, before climbing back above the $1.02 level. It was broadly steady against the pound, ending at 65.37p yesterday.

"The euro has clear potential for stronger external value. We aren't interested in a weak euro. We wish for a solid and stable euro," Mr Noyer said.

The euro has now lost 12.6 per cent of its value against the dollar since its launch on 1 January.

In London the FTSE 100 index rose 28.6 points to 6,620.6 beating a previous high of 6,598.8 in April, driven by a strong rally on Wall Street.

Market report, page 21