Dollar falls on China worries

[NEW YORK] The dollar sank against the euro and the yen on Tuesday after poor Chinese factory data added to worries about the economic slowdown in the global growth engine.

Global stock markets sank and oil tanked after official data suggested China's key manufacturing sector stalled in August. The purchasing managers index slumped to a three-year low of 49.7 in August from 50.0 in July. A reading below 50 indicates contraction.

"The US dollar debuted a little weaker in September as disappointing data from China kept markets gravitating toward low-yielders like the euro and yen, and away from riskier assets," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Both the euro and the yen benefited from investors' search for a safe haven amid the market volatility.

The euro rose 0.9 per cent, fetching US$1.1313 in late-afternoon trade. The greenback slid 1.4 per cent against the Japanese currency at 119.51 yen.

"I think it's still very much a risk sentiment-driven market," said Vassili Serebriakov of BNP Paribas.

"A we've recently seen, the euro is doing well enough in this kind of environment, with renewed market tensions."

AFP