Dollar tumbles on US growth figures

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The Independent Online

The European single currency vaulted to a four-month high against the dollar yesterday after it emerged that US economic growth was running at its slowest rate for four years.

The European single currency vaulted to a four-month high against the dollar yesterday after it emerged that US economic growth was running at its slowest rate for four years.

The dollar tumbled on the news that the economy grew by 2.2 per cent in the three months to July. The figures had been revised down from a first estimate of 2.7 per cent and were well below the second quarter's 5.6 per cent.

It was the most sluggish growth for any quarter since a 2 per cent rise in the third quarter of 1996. The GDP figure was the latest news to point to a slowing US economy and comes just days after Alan Greenspan, the chairman of the Federal Reserve, hinted he would be prepared to cut interest rates.

The euro rose as high as $0.9170, before slipping back.

The US stock markets, which have fallen sharply this week, shrugged off the economic data. Technology shares bounced back in early afternoon trading with the Nasdaq up 78 points, or 3.3 per cent, at 2,410. The Dow Jones industrial average jumped 197 points, or 1.9 per cent, to 10,516. This was despite further manufacturing gloom from Lucent Technologies, the telecom equipment maker, which said it expected its losses in the first quarter to be wider than previously expected. In Britain, the FTSE 100 closed at a seven-month low, down 61.2 points at 6,115.5.

Meanwhile, Britain has achieved a trade surplus with the rest of Europe for the first time since 1981 according to figures published yesterday. Exports to the EU exceeded imports by £200m over the three months to September.

Separate figures showed that a record £42.5bn of inward investment flowed into the UK. National Statistics, which produced the figures, said the record investment was largely driven by the £23.4bn takeover of Orange by France Telecom.

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