Euro falls to $0.9112 on poor German data

The euro fell to $0.9112 yesterday on the back of weak German economic growth figures. The single currency subsequently bounced back to $0.9139 after data showed the number of jobless at a nine-year high in the US.

The euro's initial fall followed official confirmation that gross domestic product (GDP) in Germany, the biggest economy in the 12-nation euro zone, was unchanged in the second quarter from the first. GDP grew by just 0.6 per cent in April-June period from the second quarter of 2000 - the weakest annual pace since the first quarter of 1997.

In the US, the number of people on the jobless rolls grew to a nine-year high of 3.18 million this month, official figures showed, but overall unemployment remained low at 4.5 per cent.

The German data showed the economy grew by 1.9 per cent year-on-year when seasonally adjusted, down from 2 per cent in the first quarter. However, analysts at the Federal Statistics Office said there were signs that the euro zone's largest economy could recover by the end of the year.

Their optimism echoed the tone of the Bundesbank, which also forecast zero growth in the second quarter. Chancellor Mr Gerhard Schr÷der said he believed annual growth in Germany would only reach 1.5 per cent, but the finance ministry held out yesterday against revising down from 2 per cent its growth forecast for the year.