Euro gains as dollar rally stalls

The dollar has lost some ground against the euro, a day after hitting a six-month high against the single currency.

The euro has been rattled by growing fears of a European recession. Sterling has also been falling against the dollar, hitting two-year lows.

But the dollar slipped on fears about the US economy as the Federal Reserve signalled that weak financial conditions and growth would continue.

Currency traders were also taking profits on recent gains, analysts said.

The euro was trading at $1.4730, above Tuesday's six-month low of $1.4570.

The pound stood at $1.8355, after falling to a two-year low of $1.8330 a day earlier.

Geoffrey Yu, a currency strategist at UBS in London, said that the dollar weakness was likely to be temporary.

"Investors are finding it hard to find reasons to get into the dollar and chase this move further (right now)," he said.

"We are still positive in general on the dollar - we see the euro at $1.40 by year end - but it's probably wise to exercise some caution."