Dollar Rises as Falling Stock Markets Spur Demand for Refuge

By Matthew Brown

June 3 (Bloomberg) -- The dollar rose against the euro and the yen as investors sought refuge in the U.S. currency after stocks fell on concern a three-month rally has outpaced expectations for economic growth and earnings.

The dollar climbed from a five-month low against the euro as the Dow Jones Stoxx 600 Index of European shares fell 0.9 percent from near the highest level since November and U.S. stock-index futures declined. French builder and mobile-hone operator Bouygues SA said today net income fell 29 percent, Credit Suisse Group cut its recommendation on American equities and Citigroup Inc. downgraded Russian stocks to “underweight.”

“The dollar is rising as stocks take a breather,” said Martin McMahon, a foreign-exchange strategist in Zurich at Credit Suisse Group SA. “You can’t say that today is the end of the move downwards for the dollar.”
The dollar strengthened to $1.4220 per euro as of 9:47 a.m. in London. It rose to 96.36 yen, from 96.76. The yen was little changed against the euro at 136.99.

To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net
Last Updated: June 3, 2009 04:58 EDT