LONDON, 25 October 2007 — The dollar weakened against the yen but was little changed versus the euro yesterday, weathering weaker-than-expected US housing data and a massive provision at investment banking giant Merrill Lynch, dealers said.

They said the dollar had been firmer earlier in the day but players were rightfully cautious ahead of data showing US existing home sales down 8.0 percent in September, much worse than had been forecast.

In late trade, the euro was at 1.4240 dollars, down from 1.4223 dollars in early deals and after 1.4261 dollars in New York late Tuesday.

The dollar hit a record low of 1.4347 against the euro on Monday.

UBS analysts noted that the bad US news may have perversely helped the dollar because the figures pointed to a problematic global economic outlook which makes the US unit more attractive for its safe haven qualities.

“We believe subsequent risk liquidation and repatriation (of dollars) will prove supportive for the dollar and we therefore target the euro returning to $1.35 in three months,” they said.

At the same time, support for the euro may have been tempered by news that manufacturing activity in the euro zone fell in October to a two-year low.

Late yesterday, the euro was at 162.31 yen, down from 163.73 late Tuesday, at 0.6951 pounds, unchanged, and at 1.6694 Swiss francs after 1.6729. The dollar stood at 114.05 yen, down from 114.79 and at 1.1727 Swiss francs, flat with 1.1728.

In London, the price of gold was $757.70, flat with $757.65 at the morning fix and down from $758.25 late Tuesday.

Meanwhile, European stocks dipped yesterday.

In New York, the Dow Jones Industrial Average tumbled 1.11 percent to 13,524.95, swinging lower after two days of gains. Yesterday, light, sweet crude for December delivery jumped $1.29 to $86.56 a barrel on the New York Mercantile Exchange. November gasoline rose 2.91 cents to $2.138 a gallon on the Nymex, and heating oil for November jumped 4.22 cents to $2.342 a gallon.

In London, December Brent crude jumped $1.17 to $84.02 a barrel on the ICE Futures exchange.