Hosted by Google Back to Google News Euro under pressure after ZEW survey

LONDON — The European single currency dropped against the dollar on Tuesday after a key index published in Germany, the biggest eurozone economy, was slightly weaker than expected.

In late morning trade here, the euro fell to 1.4588 dollars from 1.4619 dollars in New York late on Monday.

Against the Japanese currency, the dollar rose to 91.09 yen from 90.92 yen on Monday.

Investors are increasingly confident that Germany's economy will rebound quickly from recession, a survey showed on Tuesday, providing some cheer less than two weeks before the country goes to the polls.


The closely-watched ZEW survey, which measures the mood of financial market players, rose slightly in September to 57.7 -- its highest level since April 2006 -- from 56.1 in August.

While the reading was well above the historical average for the survey, it was slightly lower than analysts surveyed by Dow Jones Newswires had expected.

"Markets have been used to upside surprises in the ZEW index so today's softer figure pushed the euro lower," said Calyon analyst Frederik Ducrozet.

"However, in the current context of dollar weakness, the trend is not expected to last."

Official data last month showed that Germany's economy climed out of its worst recession in six decades, registering a growth rate of 0.3 percent in the second three months of the year.

The brighter outlook has boosted Chancellor Angela Merkel, who is seeking a second term in elections on September 27 and who has based her campaign around economic competence with the slogan: "The clever way out of the crisis."

Meanwhile, the dollar won a modest boost against the yen on Tuesday after Japan's outgoing Finance Minister Kaoru Yosano said rapid swings in currency rates were undesirable.

The greenback rallied away from seven-month lows against the Japanese currency after Yosano said a stronger yen would eventually undermine the competitiveness of Japanese exporters on global markets.

"It's hard to say what level (of the yen) is appropriate, but rapid currency moves are undesirable anyway," he told reporters.

Investors were watching to see who would be named Japan's next finance minister by incoming premier Yukio Hatoyama, whose centre-left government is due to take power on Wednesday.

In London on Tuesday, the euro was changing hands at 1.4588 dollars against 1.4619 dollars late on Monday, at 133.09 yen (132.94), 0.8788 pounds (0.8820) and 1.5160 Swiss francs (1.5124).

The dollar stood at 91.09 yen (90.92) and 1.0379 Swiss francs (1.0342).

The pound was at 1.6622 dollars (1.6571).

On the London Bullion Market, the price of gold fell to 999.09 dollars an ounce from 999.25 dollars an ounce late on Monday.

Posted in: Business-Economic,World News