PARIS (AFP) - The dollar traded higher against the euro Monday in response to Asian stock market declines that prompted investor appetite for currencies seen as safe havens.
But the euro in late-day trade pared some of its losses, after falling at one point to a two-week low against the dollar. The single European currency was trading at 1.4650 dollars against 1.4686 late Friday in New York.
The dollar meanwhile fell to 89.49 yen from 89.60 on Friday.
The US currency gained in appeal following market softness in Asia that analysts attributed to a weak showing on Wall Street on Friday as well as to fresh doubts over the pace of economic recovery.
But Calyon analyst Mitul Kotecha said dollar gains were likely to be limited, particularly if there were no further slide on stock markets. European and US markets rose sharply on Monday following last week's falls.
The yen meanwhile earlier struck an eight-month high against the dollar as exporters repatriated overseas earnings and Japan insisted that it would not intervene to weaken its currency.
The dollar sank as low as 88.25 yen, the weakest since late January, before rebounding later in the session.
Japanese Finance Minister Hirohisa Fujii earlier Monday reiterated that the new government was not considering a foray into the market to sell the yen and help exporters.
"The recent dollar trend (against the yen) is not abnormal," he said.
It would be a "mistake" to artificially weaken the yen to defend exporters, he added, restating the new government's view that a stronger yen would boost consumption at home thanks to cheaper imports.
His remarks gave dealers "the green light" to sell the dollar for yen, Mizuho Corporate Bank senior dealer Yuichiro Harada told Dow Jones Newswires.
Fujii, however, later appeared to backtrack somewhat, saying the yen's rise was slightly "one-sided" and that stable currency rates were desirable.
Even so, analysts said the dollar could drop below its January low of 87.10 yen, piling additional pressure on Japanese exporters.
"Without intervention to weaken the yen and with US yields so low, it's hard to see what will produce a reversal in the dollar/yen trend in the near-term," said NAB Capital analyst John Kyriakopoulos.
In London on Monday, the euro was changing hands at 1.4650 dollars against 1.4686 dollars late on Friday, 131.04 yen (131.64), 0.9199 pounds (0.9210) and 1.5092 Swiss francs (1.5091).
The dollar stood at 89.49 yen (89.60) and 1.0306 Swiss francs (1.0270).
The pound was at 1.5918 dollars (1.5951).
On the London Bullion Market, the price of gold crept up to 991.75 dollars an ounce at the fixing from 991.50 dollars an ounce late on Friday.
