LONDON, 11 October 2005 — The euro fell sharply here yesterday against the dollar as investors scaled back expectations for far-reaching economic reform in Germany under left-right coalition headed by Angela Merkel.

The single European currency in late-day trade was at 1.2055 dollars against 1.2125 late Friday in New York. The dollar was trading at 114.28 yen after 113.78 on Friday.

The euro had initially gained on news that the political stalemate in Germany was over and that Merkel would replace Gerhard Schroeder.

The euro was changing hands at 1.2055 dollars against 1.2125 late on Friday in New York, 137.79 (137.78), 0.6876 pounds (0.6887) and 1.5493 Swiss francs (1.5496). The dollar stood at 114.28 yen (113.78) and 1.2851 Swiss francs (1.2778).

On the London Bullion Market, the price of an ounce of gold edged up to $473.20 from $472.70 late on Friday.

Meanwhile, European stock exchanges bolted higher yesterday. The London FTSE 100 index rose 0.23 percent to close at 5,374.5 while in Paris the CAC 40 added 0.16 percent to reach 4,536.22. In Frankfurt the DAX was up 0.30 percent at the close at 5,022.79.

Elsewhere there were gains of 0.64 percent to 10,800.6 on the Ibex-35 in Madrid, 0.06 percent to 3,331.62 on the Bel-20 in Brussels, 0.04 percent to 33,635 on the SP Mib in Milan and 0.06 percent to 6,950.86 on the Swiss Market Index. The AEX in Amsterdam fell 0.10 percent to 398.27.

US stocks edged mainly lower Monday. The Dow Jones Industrial Average erased earlier losses to seesaw back up 2.24 points, or 0.02 percent, to 10,294.43. The technology-heavy NASDAQ lost 2.92 points, or 0.14 percent, at 2,087.43. The broad-market Standard and Poor’s 500 index shed 2.77 points (0.23 percent) at 1,193.13.

Asian stocks closed firmer yesterday. In Seoul, the KOSPI index closed up 26.17 points at 1,227.18 on volume. Tokyo stock market was closed yesterday. In Hong Kong, the Hang Seng index closed up 50.98 points at 14,898.77. In Sydney, the S and P ASX 200 index closed up 28.5 points at 4,469.1. In Singapore, the Straits Times Index rose 38.15 points to 2,343.39. The Kuala Lumpur Composite Index was up 3.67 points to 928.88. In Manila, the composite index fell 2.86 points to 1,949.42. In Bombay, the 30 share Sensex fell 7.7 points, or 0.09 percent, to 8,483.86 while in Karachi the benchmark 100 index fell 21.56 points to 8,520.82.