Euro recovers from six-month dollar low

In morning London deals, the European single currency jumped to $1.4723  from $1.4653 in New York late on Tuesday. Against the Japanese currency, the dollar fell to 108.83 yen from 109.67.

"The weaker than expected IFO Business Climate index from Germany yesterday (Tuesday) prompted an initial bout of euro selling
against the dollar but this was nearly fully reversed by the London close of trading," said Derek Halpenny, European head of global currency research at The Bank of Tokyo-Mitsubishi in London.

The euro had slumped under $1.46 on Tuesday after the release of downbeat consumer confidence and business sentiment surveys in Germany, Europe's biggest economy.

The monthly business climate index calculated by the Munich-based economic research institute Ifo fell to 94.8 points from 97.5 points in July, the lowest level since August 2005.

The euro was also weighed down by worries about Russia's recent military action in Georgia, traders had said. Russia is a major supplier of energy to Europe, while Georgia is a key transit point for crude oil and gas exports from Azerbaijan to Western markets.

"Given current conditions of the European economy, it would be difficult to keep buying back the euro," a Tokyo trader told Dow Jones Newswires on Wednesday.

The dollar has been supported recently by speculation that major economies other than the United States may feel the brunt of a global slowdown, prompting the central banks in those countries to lower interest rates.

In contrast, minutes from the Federal Reserves August 5 meeting released Tuesday showed members indicated their next move was still most likely an interest rate hike in view of inflationary pressures.

Dealers were waiting for more U.S. economic data due this week, including durable goods orders on Wednesday, followed by weekly jobless claims and second-quarter economic growth on Thursday.

In Japan the latest snapshots of consumer price inflation and industrial output are slated for release on Friday.

Elsewhere on Wednesday, the British pound rebounded after falling on Tuesday to as low as 1.8331, the weakest point since July
2006.

In London trading on Wednesday, the euro changed hands at $1.4723 against $1.4653 late on Tuesday, at 160.19 yen (160.71), 0.7977 pounds (0.7963) and 1.6117 Swiss francs (1.6110).

The dollar stood at 108.83 yen (109.67) and 1.0950 Swiss francs (1.0994). The pound was at 1.8453 dollars (1.8394).