A rise in risk aversion dominated market trading as investors increasingly fret that the credit crunch will result in a slowdown in the global economy, boosting safe-haven currencies such as the yen and the Swiss franc. The growing sentiment that the effects of the credit crunch will not be confined to the US has also boosted the dollar, taking the euro to its lowest level in nearly four weeks against the US unit. The euro is coming under additional pressure as the market becomes increasingly convinced that euro zone interest rates could be set to fall. European Central Bank board member Yves Mersch last week suggested concerns over inflation were overdone, backed up by softer-than-expected German PPI figures this morning. German PPI fell 0.1 pct on the month in December, well below forecasts for a 0.2 pct rise, suggesting the ECB may have less of a headache over inflation than previously thought. "The market has to get used to the idea that the ECB may shift from its hawkish stance with an eye on easing policy by the end of the second quarter," said Gavin Friend at Commerzbank. Elsewhere, the pound was little changed from earlier as weak UK public finances and mortgage lending data offset earlier news which boosted hopes of a conclusion to the long-running saga of troubled UK mortgage lender Northern Rock.