22 July 2005, 15:58  Yen loses ground

The yen fell against the dollar and euro on Friday, giving back almost half of its strong gains made the previous session when China abandoned the yuan's dollar peg in favor of a basket of currencies. Meanwhile the British pound remained jittery on security concerns in London, losing some ground versus the dollar and the euro on a report that police had shot a suspected suicide bomber and suspended two underground train lines. There was also a report armed police had surrounded a mosque in east London. Investors took a step back to digest the news that China moved to a managed float and let the yuan appreciate by slightly more than two percent against the dollar. Many details remain unclear, including the composition of the basket, China's plans for any future moves and any follow-up from other Asian countries. "The market has realized that this is a small move from China," said Paul Mackel, currency strategist at ABN AMRO in London. "There is wariness of selling the dollar versus Asia too aggressively. And there is also some profit-taking after yesterday's move." By 1000 GMT the dollar was up 0.6 percent on the day at 110.90 after falling 2.5 yen to a three-week low of 109.85 in the wake of China news. The yen made its biggest one-day gain against up 0.1 percent against the dollar at $1.2177, only making small gains after China's move. the dollar in more than 3 years on Thursday. The euro was up 0.7 percent at 135.09 yen. Before the yuan revaluation, the dollar had struck a 14-month high above 113.70 yen earlier in the week, helped by the prospect of further rises in U.S. interest rates. The euro was

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