Euro Little Changed Against Dollar

The euro was little changed against the dollar, rebounding from a 5 1/2-month low, after policy makers said the European Central Bank remains focused on inflation and traders judged last week's 3.6 percent drop excessive.

The European currency recovered from a two-month low versus the yen on speculation a government report this week will show consumer-price growth in the region accelerated to a 16-year high last month, more than double the ECB's 2 percent ceiling. Central bank council member Klaus Liebscher said policy makers remain focused on the ``worrying'' level of inflation, Market News reported today, citing an interview.

The euro traded at $1.5010 at 8:01 a.m. in New York after falling to $1.4907, the lowest level since Feb. 26, from $1.5005 on Aug. 8. The single currency weakened to 164.78 yen, from 165.38 at the end of last week. It earlier touched 163.65 yen, the weakest level since June 5. The dollar fell to 109.81 yen, from 110.18.

The European single currency sank the most in almost eight years against the dollar on Aug. 8 as traders pared bets the ECB will raise interest rates as the economy slows. The weekly decline was the most since January 2005.

Further gains in the euro may be limited after a government report showed French industrial production, which accounts for 15 percent of the euro-area's second-largest economy, unexpectedly fell in June. Output slid 0.4 percent from May, when it declined 2.9 percent, according to Insee, the National Statistics Office in Paris.

Investors may also be deterred after Moody's Investors Service said defaults on loans included in European commercial mortgage-backed securities rose 80 percent in the second quarter, sparking concern the financial turmoil in the region is deepening.

Euro Little Changed Against Dollar, Bloomberg
8/11/2008 6:26:45 AM