Dollar rises as economic data worsen worldwide

NEW YORK: The dollar rallied Thursday, sending the euro below $1.35 on worries about economic growth in the U.S. and Europe as well as European debt problems.

Initial claims for U.S. unemployment benefits unexpectedly rose last week while measures of economic sentiment in Europe and business investment in Britain declined.

In morning trading in New York, the 16-nation euro dropped to $1.3497 from $1.3528 late Wednesday. That's just shy of a 9-month low of $1.3444 hit on Feb. 19.

Just last November, the euro traded above $1.51 before worries over debt loads in Greece and other European countries began to roil bond markets.

Meanwhile, the British pound fell to $1.5285 from $1.5398 after hitting its lowest point since May 2009 at $1.5247 earlier in the day.

The European Commission said Thursday that economic sentiment in the 16 countries that use the euro deteriorated in February for the first time in nearly a year. In the U.K., meanwhile, business investment dropped 5.8 percent in the fourth quarter, raising concerns about a "double dip" in British economic growth, said analysts from Brown Brothers Harriman in a research note.

Meanwhile, credit ratings agency Moody's seconded a warning from Standard & Poor's, saying it could also cut its credit rating on Greece within a month if the heavily-indebted country doesn't follow through with its deficit cuts.

The dollar fell to 89 Japanese yen from 90.15 yen as investors also flocked to the low-yielding yen's perceived safety — but was up broadly against Asian currencies, currencies in the Nordic countries, and currencies in countries that are big exporters of commodities, such as the Australian, New Zealand and Canadian dollars, as well as the Brazilian real.

Big exporters tend to drop on weaker-than-expected economic news, as a slide back into recession or a weak recovery means companies and consumers need less energy, steel and other raw goods.

The economic recovery is a concern in the U.S. as well as jobs remain scarce. The government said on Thursday that new claims for unemployment aid rose 22,000 to a seasonally adjusted 496,000. The four-week average, which smooths out week-to-week fluctuations, has risen by about 30,000 in the past weeks. The Federal Reserve has said it expects the unemployment rate to average from 9.5 percent to 9.7 percent this year.

In other morning trading in New York, the dollar rose to 1.0837 Swiss francs from 1.0817 francs, and gained to 1.0650 Canadian dollars from 1.0553 Canadian dollars late Wednesday.