Sick stocks put dollar on the rack

THE dollar lurched to fresh 26-month lows to the pound and staggered closer to parity with the euro on renewed fears for Wall Street stocks. Still reeling from Monday's revelations over accounting at US drugs giant Merck, futures markets predicted another dog day for New York markets, stripping away support for the greenback.

Sterling jumped to its highest since May 2000, at $1.5467, up a quarter of a cent on the day. The euro rose to 99.43 US cents. 'The dollar is just looking horrible,' said Paul Bednarczyk, currency strategist at the 4Cast consultancy. The euro all but shrugged off grisly manufacturing output from Germany, which saw unemployment rise last month.

Meanwhile, official figures for May showed a decline in German imports which, along with a surge in exports to the US, helped fuel the narrowest British trade deficit since July 1997. April's £2.4bn deficit was sliced back to £1.7bn. It was the second month in a row that the trade deficit measured by the Office for National Statistics had narrowed. The figures will provide a boost to Britain's economic growth for the second quarter of the year, analysts said.