NEW YORK (AFP) — The dollar slipped against the euro and yen Monday after optimism over China's announcement of a massive economic stimulus package to fight slowing growth was clouded by financial worries.
The euro climbed to 1.2748 dollars around 2200 GMT from 1.2719 dollars late Friday.
The dollar dipped to 97.99 yen from 98.21.
The single European currency climbed as high as 1.2930 dollars after China announced on Sunday that it would spend four trillion yuan (586 billion dollars) over two years to spur domestic demand, before paring its gains as optimism faded.
"The impact on the financial markets of China's 586 billion dollar stimulus plan proved to be short-lived, as the overnight surge in foreign stock markets failed to boost US shares," said Terri Belkas, analyst at Forex Capital Markets.
"Concerns about the impact of the financial crisis on US companies like Goldman Sachs and General Motors weighed on investor sentiment, as Barclays said the credit crunch may drag Goldman to its first quarterly loss since going public while Deutsche Bank said that shares of General Motors Corp. could eventually fall to zero," she said.
Belkas noted that dovish comments from European Central Bank president Jean-Claude Trichet over the weekend had weighed on the euro, after the ECB cut its key interest rate a half point to 3.25 percent Thursday.
Michael Klawitte of Dresdner Kleinwort cited "pressure on the dollar -- which may ... reflect concerns that China will finance parts of the package by reducing its foreign exchange reserves" held largely in dollars.
"The dollar appears to have undergone a reality check following its rapid ascent over recent months," said Mitul Kotecha of investment bank Calyon.
It "is set for a period of consolidation as risk appetite attempts to make a tentative recovery and markets digest weak data and assess the impact of various stimulus measures."
The British pound hit a historic low against the euro after a record drop in producer prices stoked expectations of further interest rate cuts from the Bank of England, analysts said.
The euro earlier spiked to 82.09 pence, the highest level against the pound since the creation of the European single currency in 1999.
In late New York trade, the euro rose to 81.73 pence from 81.25 pence late Friday.
The pound fell to 1.5611 dollars from 1.5645 dollars and the dollar rose to 1.1787 Swiss francs from 1.1783.
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