LONDON, 24 September 2005 — The euro fell to its lowest level against the dollar for nearly two months yesterday because of political uncertainty in Germany and Italy and support for the dollar from news that Hurricane Rita had lost some force.

The euro fell to 1.2062 dollars in afternoon European trading, its lowest level since July 28, from 1.2152 late on Thursday in New York.

In late trade, it recovered to 1.2076 dollars. The European single currency has fallen more than 4.0 percent against the dollar since the start of the month. The dollar firmed to 112.15 yen from 111.70 on Thursday. The dollar yen rate remained in a tight range, owing to a holiday in Japan yesterday.

The dollar gained strength after Hurricane Rita was downgraded to a category four storm yesterday from a category five, putting the spotlight back on Tuesday’s rate hike by the US Federal Reserve to 3.75 percent.

The euro was changing hands at 1.2076 dollars against 1.2152 late on Thursday in New York, 135.51 yen (135.70), 0.6793 pounds (0.6785) and 1.5564 Swiss francs (1.5532).

The dollar stood at 112.15 yen (111.70) and 1.2884 Swiss francs (1.2783). The pound was trading at 1.7792 dollars (1.7902), 199.55 yen (199.99) and 2.2920 Swiss francs (2.2888).

Meanwhile, European stock markets closed higher yesterday.

In London, the FTSE 100 index gained 0.52 percent at 5,413.6 points, while the Frankfurt DAX 30 added 0.69 percent at 4,882.58 and the Paris CAC 40 rose 0.65 percent to 4,477.20.The DJ Euro Stoxx 50 index of leading euro zone shares climbed 0.58 percent to 3,331.55.

US stocks traded slightly lower yesterday. The Dow Jones Industrial Average dipped 14.62 points (0.14 percent) to 10,407,43 while the NASDAQ composite shed a fractional 0.75 point (0.04 percent) to 2,110.03 at 1530 GMT.

The Standard and Poor’s 500 index edged down 0.86 point (0.07 percent) to 1,213.76.

Earlier in Asia, the Japanese stock market was closed for a long holiday weekend.

Hong Kong’s benchmark Hang Seng Index closed 0.24 percent lower at 15,143.97. In Seoul, the KOSPI index closed down 24.09 points at 1,175.88. The 30-share Bombay stock exchange Sensex index closed up 0.01 percent or 0.95 points at 8,222.59.