Euro slips versus dollar amid eurozone inflation

LONDON: The European single currency retreated Friday against the dollar as investors digested tumbling eurozone inflation data ahead of fourth-quarter economic growth numbers in the United States.In midday London trade, the European single currency fell to 1.2673 dollars from 1.2743 late on Thursday.Against the Japanese currency, the dollar sank to 97.30 yen from 98.46 yen on Thursday.Official EU figures Friday showed that inflation in the 16 countries using the euro dropped in January by the sharpest rate on record, slumping to 1.1 percent in the face of a sharp economic downturn.The fall brought 12-month eurozone inflation to the lowest point since July 1999 and was down sharply from the 1.6 percent that the European Union's Eurostat data agency recorded in December.The drop, which was greater than market expectations for 1.4 percent, confirmed an earlier estimate and brought inflation to well below the European Central Bank's comfort zone of close to but less than 2.0 percent.The ECB is likely to lower its key interest rate by another half a percentage point at its meeting next month, a member of the bank's board suggested on Wednesday.The prospect of lower interest tends to weigh on currencies as they become a less attractive investment.After hitting a record high of 4.0 percent in June and July, eurozone inflation has fallen sharply as oil and other commodity prices have collapsed in the face of a deep economic downturn.The drop in inflation has paved the way for a series of interest rate cuts by the ECB which has slashed its main rate to a record low of 2.0 percent.The battered eurozone economies suffered further bad news on Friday with a quarter of a million jobs lost in January, bringing the unemployment rate to 8.2 percent, the highest level in over two years.Elsewhere, the yen rallied against the dollar on relief that a raft of dismal economic data was not worse than investors had feared, dealers said.A record 10 percent drop in Japan's factory output in January, while bad, was in line with market expectations, noted Yuji Saito, head of forex at Societe Generale."This triggered profit taking" by speculators who had sold the yen in anticipation of weak data, he said.In London trade on Friday, the euro changed hands at 1.2673 dollars against 1.2743 dollars late on Thursday, at 123.15 yen (125.49), 0.8933 pounds (0.8895) and 1.4854 Swiss francs (1.4841).The dollar stood at 97.30 yen (98.46) and 1.1576 Swiss francs (1.1644).The pound was at 1.4170 dollars (1.4322).On the London Bullion Market, the price of gold rose to 945.13 dollars an ounce from 936.50 dollars on Thursday