By John Beresford-Peirse
London, Nov. 20 (Bloomberg) -- The euro was little changed near a three-month low against the dollar as reports provided further evidence of slowing growth among the 12 economies sharing the common currency.
Industrial production in the region fell for a third straight quarter in September, a report today showed. German business confidence and third-quarter growth reports this week are also expected to reflect a weakening economy. While the U.S. economy is also cooling, the euro is suffering because investors view the Federal Reserve as doing more than the European Central Bank to revive growth.
``The general view is that the ECB's objective is to control inflation, while the Fed's is growth,'' which weighs on the euro, said Michael Turner, who helps oversee 9 billion pounds ($12.7 billion) at Edinburgh Fund Managers. ``Anything that promotes earnings growth (like rate cuts) will promote a country's currency.''
The euro traded at 88.27 U.S. cents from 88.14 yesterday, when it reached 87.64, its weakest since Aug. 8. It's now almost two cents lower than on the day before the Sept. 11 attacks in the U.S. Against the yen, it was little changed at 108.43 per euro from 108.53. Factories, farms and mines in the 12 countries using the euro cut production 0.3 percent in the three months ended in September, following a decline of 0.8 percent in the second quarter and 0.3 percent in the first, the European statistics agency said.
Ifo
The Ifo research institute's index of business confidence in western Germany, due tomorrow, was probably little changed last month near an eight-year low, analysts surveyed by Bloomberg News said. Growth in Europe's biggest economy probably stalled for a second straight quarter in the three months ended in September, they said.
Economic expansion in the countries using the euro will decelerate to 1.6 percent this year and 1.4 percent next, before speeding up to 3 percent in 2003, the Organization for Economic Cooperation and Development said today. In May, the Paris-based group had forecast 2.7 percent growth in 2001. Last year, the economy expanded 3.4 percent.
``The market will use weak European reports to sell euros, while it largely ignores weak U.S. data,'' said Steve Barrow, a currency strategist at Bear Stearns International. ``It wants to stay long dollars because (Osama bin Laden) may be found soon,'' which could give the dollar a sudden boost.
The U.S. began a bombing campaign Oct. 7 when the Taliban failed to hand over bin Laden and close down his al-Qaeda network. Al-Qaeda is blamed for the Sept. 11 attacks on the World Trade Center and the Pentagon that killed about 4,600 people.
The Taliban have been driven from most major cities by the Northern Alliance in the north and tribal leaders in the south since last week.
Opening for Rate Cuts?

Signs of slowing inflation may suggest the European Central Bank has more room to lower interest rates to boost growth, which could give the euro some support, analysts said.
The annual rate of inflation in Italy, the region's third- largest economy, slowed to 2.4 percent in November from 2.5 percent in October, a survey of 12 major cities showed today. That's the lowest level in more than a year. The report is one of the earliest indicators of where consumer prices in the region are headed each month.
Even so, comments from central bank officials yesterday lowered expectations for further interest-rate cuts.
The bank has reduced borrowing costs four times this year to 3.25 percent. That compares with the Federal Reserve's 10 reductions, taking its benchmark borrowing cost to 2 percent, the lowest level in 40 years.
``The market sees the Fed as being more proactive,'' said Sonja Hellemann, a currency strategist at Dresdner Kleinwort Wasserstein. That's one reason that ``if there's weak data in the euro area it has more impact on the euro than bad figures have on the dollar.''
The single currency rose from around 87.95 after China said it will boost its euro reserves, said Hellemann at Dresdner. ``China's foreign-exchange reserves will hold more euro-denominated assets,'' said Guo Shuqing, China's deputy central bank governor.
The country had $203 billion in foreign-exchange reserves at the end of October, the world's second highest, Guo said. He didn't give the value of planned euro purchases or say when China will buy more of the currency. He also declined to say how much of China's reserves euros now account for.