LONDON, Dec 22: Europe’s single currency gained further against the dollar on foreign exchange markets on Monday but its advances were held back after fresh data pointed to grim months ahead for the eurozone economy.The euro was being exchanged for $1.3938 at in late-day trade, which was up from $1.3913 on Friday. It rose to as high as $1.4090 during the day but fell back down after the economic crisis data reports.

The euro made record gains against the dollar last week after the US Federal Reserve said it was slashing interest rates. But analysts say the gains are not tenable and the European Central Bank will also have to cut interest rates.

“Overall, we see that the euro’s upward momentum is strong in the reduced liquidity conditions during the holiday season,” Barclays Capital, a London-based international investment bank, said in a statement.

“But we continue to think that the huge gains ... are not sustainable as valuation has become stretched and we also expect the ECB to adopt a more dovish stance and even potentially cut rates in January,” it added.

The British pound meanwhile languished close to its record low point against the euro. Sterling has been hit in recent weeks by mounting expectations that the Bank of England will cut interest rates further in 2009.

In trading in London on Monday, the euro changed hands at 0.9471 pounds.

But news on Monday that industrial orders in the eurozone were down 4.7 per cent during October, as well as more depressing economic data from Germany that showed a fall in import prices, held the euro back, analysts said.

With markets in Europe, Japan and the United States closing this week for public holidays, currencies would likely trade within tight ranges, they added.

“The shortened week and potentially low trading volumes could see exchange rates get stuck in ranges,” said Barclays Capital analyst David Woo.

Against the yen, the dollar rose to 90.07 yen, up from 89.32 yen on Friday.

The dollar has found some support after the White House announced an emergency loan of $13.4 billion for General Motors and Chrysler, which face the threat of imminent bankruptcy, dealers said.

The yen also took a hit after Japan said that exports fell at their fastest-ever rate in November due to the global recession and the strong yen, which makes Japanese goods less competitive.

The Japanese government downgraded its December assessment of the economy for the first time in nearly seven years, describing it as “worsening” due to rapidly cooling industrial production and corporate profits.

In Russia, the central bank allowed the ruble to weaken by around 1.5 per cent against its benchmark currency basket, as analysts said they expected a further decline in its value of up to 15 per cent over the next weeks.

The currency basket -- composed of 55 per cent dollars and 45 per cent euros -- was worth 33.39 rubles compared with 32.86 on Friday. It was the ninth devaluation for the ruble since November.

China meanwhile announced its fifth interest rate cut since September, reducing the benchmark one-year lending rate by 0.27 percentage points to 5.31pc.

The move, aimed at implementing a “moderately loose monetary policy,” would take effect on Tuesday, according to a statement on the bank’s website.

China’s yuan closed up 6.8517 yuan to the dollar compared to 6.8457 yuan to the dollar on Friday. On the London Bullion Market, the price of gold rose to $849 an ounce from $835.75 late on Friday.—AFP