LONDON, Sept 9 - The dollar slid to a three-week low against the euro on Tuesday as the prospect of a weaker open on Wall Street and a dearth of U.S. economic data left the market pondering if greenback bulls had got ahead of themselves. The dollar strode to its highest in over four months against the euro last week, fired by a raft of upbeat economic news, but has struggled to regain momentum ever since data on Friday showed U.S. employers cutting jobs at the fastest pace since March. Security fears ahead of the second anniversary if the September 11 attacks on the Pentagon and New York's World Trade Centre also weighed on dollar sentiment.
"There is continued dismay after the U.S. payrolls numbers and the market does not want to be long dollars ahead of the September 11 anniversary," said Mark Henry, currency strategist at GNI. By 1145 GMT, the dollar was down over half a percent at $1.1140 to the euro and a third of a percent weaker at 116.40 yen . Economic news from the euro zone was mixed, with data showing the euro zone economy contracted in the second quarter contrasting with a survey showing Italian business confidence soared in August to its highest level in nearly a year.
US DATA LULL
U.S. stocks were poised to open flat to lower after an uninspiring trading update from Nokia tempered enthusiasm for the technology sector after a powerful surge. The Nasdaq closed at an 18-month high on Monday after analysts issued bullish reports on the prospects for a rebound in the economy and corporate profitability. No major U.S. releases are due until retail sales figures on Friday which are expected to rise for a fourth month in a row, plumped up by an August car buying spree. "After disappointment on the (U.S.) payrolls we're not getting any data to counter this sentiment in the market," said Peter Fontaine, currency strategist at KBC in Brussels. Wariness that Japan could step in to sell yen for dollars provided downside support for the greenback, but dealers said it would only slow the yen's recent uptrend. "There is growing interest from foreigners in buying Japanese stocks and that is keeping the yen buoyant," said Hideaki Furumaya, head of the corporate desk at Trust and Custody Services Bank. The key Nikkei average <.N225> surged over two percent to a 14-month high after Morgan Stanley raised its recommended exposure to Japanese stocks to "overweight" from "neutral".//