Dollar turns higher vs euro as stress tests loom

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NEW YORK (AP) — The dollar turned higher versus the euro Tuesday, stopping a week-long rally in the European currency ahead of the release of stress tests on European banks at the end of this week.

Reports showing a steep drop in U.S. home construction and disappointing revenue at blue-chips Goldman Sachs Group Inc. and IBM Corp. dampened investor interest in riskier investments, lending support to the dollar and yen.

The euro briefly rose above $1.30 Tuesday before falling to $1.2895 in late New York trading after the release of the weak U.S. data and Goldman earnings. On Monday, the euro was worth $1.2960.

The euro had topped $1.30 for the first time in more than two months last Friday as several European countries successfully raised money through bond sales without having to tap a $1 trillion emergency financing facility.

The euro had plunged to a four-year low in early June because of concerns about the debt crisis in Europe and slowing growth there. The potential hit to banks from both has become another worry, which the European Union is trying to assuage by releasing the results of “stress tests” on European banks Friday.

In other late trading, the British pound edged up to $1.5263 from $1.5237, while the dollar rose to 87.21 Japanese yen from 86.77 yen.

The dollar slipped to 1.0471 Canadian dollars from 1.0549 Canadian dollars after the Bank of Canada lifted interest rates to 0.75 percent from 0.5 percent.

The dollar dropped to 1.0504 Swiss francs from 1.0529 francs and was lower versus the Australian and New Zealand dollars.