Euro falls against dollar to US$1.3532

The euro fell against the dollar Friday as world markets retreated further on worries that strains in the financial system would persist and growth would suffer.

The 15-nation euro bought US$1.3532 in European morning trading, down from the US$1.3661 late Thursday in New York.

Asian stocks were battered Friday, and Australian market watchers called it "Black Friday."

The Australian benchmark S&P/ASX200 plummeted 8.34 percent, or 360.2 points, to close at 3,960.7, its biggest one-day percentage loss.

Both Germany's DAX and Wall Street began Thursday in positive territory on a coordinated central banks rate cut, and news that the Bush administration was considering taking part ownership in a number of U.S. banks.

But the German market closed in negative territory and the Dow Jones industrials plunged more than 675 points to end below 9,000, its lowest level in five years.

The Fed and other leading central banks lowered key interest rates this week to help unclog the credit markets and promote lending.

Cutting interest rates can stimulate economic growth and help restore confidence to markets, but doing so also undermines currencies as investors look for better returns elsewhere. The U.S. rate is now the second-lowest among the majors, higher only than Japan's.

"The winds of recession we portended last month have transformed into a full-blown storm spreading across the (European) continent," said Aurelio Maccario, an economist with UniCredit.

"No banking system and no economy appears safe, and it is now common belief that a recessionary scenario is in the cards also for the euro area."

In other currencies, the British pound also fell sharply against the dollar buying US$1.6845 in Friday morning trading compared with US$1.7197, while the dollar bought 98.64 Japanese yen, compared with the 100.48 yen late Thursday in New York.

It is the pound's lowest point against the dollar since November 2003 and the dollar's lowest point against the yen since late March of this year, according to Federal Reserve statistics.