LONDON, 28 September 2004 — The dollar weakened against the euro yesterday as investors adjusted their US interest rate expectations to take into account soaring oil prices. Meanwhile, the yen was held at six-week lows against the dollar as oil prices broke record highs, sparking fears over the impact on Japan’s economic recovery.

The single European currency stood at 1.2306 dollars from 1.2275 late on Friday in New York. The dollar was being traded at 111.09 yen from 110.62 on Friday.

The euro was changing hands at 1.2306 dollars against 1.2275 late on Friday in New York, 136.69 yen (135.80), 0.6810 pounds (0.6799) and 1.5491 Swiss francs (1.5463). The dollar stood at 111.09 yen (110.62) and 1.2586 Swiss francs (1.2605). The pound was at 1.8068 dollars (1.8051), 200.83 yen (199.65) and 2.2753 Swiss francs (2.2733).

US stocks fell yesterday, with the Dow dipping briefly below 10,000, as oil prices climbed, threatening to shrink corporate profits, and a brokerage downgrade hurt semiconductor shares.

The Dow Jones industrial average was down 21.61 points, or 0.22 percent, at 10,025.63. The Standard & Poor’s 500 Index was down 3.13 points, or 0.28 percent, at 1,106.98. The technology-laced NASDAQ Composite Index was down 10.50 points, or 0.56 percent, at 1,868.98.

Asian share markets closed lower as a further spike in key oil prices revived worries about the impact on global demand and economic growth. Japanese share prices closed down 0.33 percent in cautious trade ahead of the release of the Bank of Japan’s key quarterly Tankan business survey on Friday, dealers said. The Tokyo Stock Exchange’s benchmark Nikkei-225 index lost 35.84 points to 10,859.32. The broader TOPIX index of all First Section shares fell 7.13 points or 0.65 percent to 1,095.24.

Hong Kong share prices closed down 0.34 percent but were well off the early lows which took the market back through 13,000 points at one stage, dealers said. The key Hang Seng Index closed down 44.94 points or 0.34 percent at 13,021.90, off a low of 12,908.10 and high of 13,067.76, on turnover of 12.91 billion Hong Kong dollars.

Chinese share prices closed 0.57 percent lower with financial and pharmaceutical stocks pressured as the market consolidated recent gains, dealers said.