BBC Europe Correspondent Jonathan Charles: A fresh impetus to European integration

Asia-Pacific markets had the first bite at euro trading and saw a cautious but firm start.

However but all eyes were on London, the world's largest currency market, and then New York, home of the euro's biggest rival, the US dollar.

After rising to a peak of $1.1877 after the London opening, the euro settled back to trade at $1.1790 in New York at 1600 GMT, still more than a cent above its pre-set opening level of $1.1675.

Meanwhile, the euro also rose against the pound to stand at 71.17 pence after opening at 70.45p.

"The euro has arrived" pronounce banners at the Frankfurt stock exchange

As expected, most of the euro-dollar and euro-sterling deals are small and designed to test the market's settlement systems. Brokers have entered a new world with different exchange rates and share and bond prices.

"People are getting used to the new system and new conventions, and as a result it is difficult for them to take many fundamental positions," said David Bloom, currency strategist at HSBC Markets in London.

Traders need some time to get used to the euro rates

There had been fears that some settlement systems would not cope with the new currency, but so far all banks and markets report trouble-free trading.

Misdirected and miscalculated payments could have cost banks millions and created chaos across the world's financial system.

Consumers, meanwhile, can sit back and relax. Euro bank notes and coins will not be introduced before 2002, so they have three more years to get used to the new currency and euro prices.

Euro stronger

Light trade marked the euro's debut in Australia

Michael Lewis, currency analyst at Deutsche Bank, said: "Sterling was naturally hit by the euro's dream launch today, and a weaker dollar." However, in later trading the dollar staged a modest recovery.

A strong euro is a two-edged sword for Euroland. It will boost the credibility of the new currency, but could threaten the region's export industries.

Stability key

During the first months of trading, the euro-dollar rate is expected to be somewhat volatile as the markets strive to achieve a balance between the two currencies.

Norbert Walter: euro a challenger to dollar in financial markets

Jeremy Hawkins, chief economic advisor at Bank of America in London, said: "The ECB is keen to see the euro as stable as possible, in particular in the first phase of trading. The ECB doesn't want to see it too weak or too strong."

Once the situation has settled the Japanese yen could be the overall loser. Bankers and traders expect many Asian investors to begin shifting a big amount of their savings into bonds and other investments denominated in the euro, dumping yen in the single currency's favour.

German bank staff wait for the introduction of the euro

It is unlikely that there will be a big rush for euros, because most banks and governments already hold them - their old Deutschmarks, French francs and other Euroland currencies have now become euros.

Nonetheless, many analysts believe that the euro will prove to be an even stronger currency that could end the US dollar's long-standing dominance in the world's financial markets.

The banking community is likely to purchase large quantities of euros in preference to currencies outside Euroland such as the pound sterling or even the dollar.