The dollar traded mixed Wednesday after China moves to rein in the country's credit boom, sparking concerns that the pace of recovery in the global economy could lose steam.
In London morning deals, the euro rose to 1.4507 dollars, from 1.4484 late in New York on Tuesday.
Against the Japanese unit, the dollar -- often seen as a "safe haven" currency in times of economic uncertainty -- increased to 91.42 yen from 91.01 yen late on Tuesday.
Risk appetite declined after Beijing on Tuesday hiked the minimum amount of money that banks must keep in reserve for the first time in more than a year, seeking to prevent the economy overheating after huge stimulus spending.
"China has been key in helping the rest of the region to get out from last year's recession, and a quick moderation of Chinese demand would withdraw part of this support," Calyon analysts wrote in a note.
"The turn in sentiment has hit commodities and commodity currencies particularly hard," they added. "As would be expected against the background of higher risk aversion, the dollar made up some ground."
Analysts said they expected Beijing to gradually tighten monetary policy further to fight the risks of excessive liquidity and asset bubbles.
Sentiment was also dampened by a weak earnings report from US aluminium giant Alcoa and as investors waited for the Beige Book report on economic conditions in the United States to be released later in the day.
Market players also digested downbeat economic growth data from Germany.
Germany suffered its worst recession ever last year as Europe's largest economy contracted by five percent, official data showed.
Economic activity declined for the first time in six years, as exports fell by 14.7 percent and business investment plunged by 20 percent, the Destatis national data service said in a statement.
The figure was the worst official figure recorded in Germany since the Great Depression, when annual output contracted by more than seven percent in 1931-32, it added in a report.
"The German news supported the dollar at the European open but the dollar's position (was) weakened by last week's payrolls data," said Forex.com analyst Jane Foley.
Meanwhile, traders were awaiting an interest rate announcement from the European Central Bank on Thursday.
In London on Wednesday, the euro was changing hands at 1.4507 dollars against 1.4484 dollars late on Tuesday, 132.64 yen (131.80), 0.8932 pounds (0.8961) and 1.4781 Swiss francs (1.4753).
The dollar stood at 91.42 yen (91.01) and 1.0188 Swiss francs (1.0185).
The pound was at 1.6242 dollars (1.6158).
On the London Bullion Market, the price of gold fell to 1,132.50 dollars an ounce from 1,153 dollars on Tuesday.
Copyright 2010  AFP Global Edition
