Dollar Rises Sharply on U.S. Economy News
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Dollar Rises Sharply on U.S. Economy News

The dollar rose sharply against the Japanese yen and the euro Thursday on signs of strength at U.S. factories and in the broader economy. A stream of discouraging headlines about the European debt crisis pummeled the euro.

Manufacturing grew in the Philadelphia region grew for the first time in three months, the Federal Reserve Bank of Philadelphia said. The bank's index of regional manufacturing jumped to 8.7 this month from -17.5 in September. It was the best reading in six months and signaled that factories are recovering from a slow summer.

A separate gauge of future economic activity crept upward, signaling modest growth in coming months. The Conference Board's index of leading economic indicators rose 0.2 percent, easing fears of another recession.

A strong U.S. economy helps the dollar by boosting U.S. investments. Traders buy dollars to invest in stocks and corporate bonds.

The dollar rose to 76.88 yen at 12:01 p.m. Eastern time from 76.78 late Wednesday. It had fallen overnight against the yen, euro and other currencies, but started to recover around 6 a.m.

The euro fell to $1.3672 from $1.3747 late Wednesday. It was the lowest rate in a week. The euro fell back from a daily high of $1.3834, reached at 6:29 a.m.

The euro has been weakening because of uncertainty about the ability of European leaders to solve their debt crisis. Greece's international lenders don't believe a proposed second bailout will be enough to prevent the country from running out of cash. It said they might put off a decision about the rescue until the end of next month.

At midday, several news outlets reported that German Chancellor Angela Merkel had canceled plans to address parliament about the crisis on Friday. Germany will play a central role in any bailout because it has Europe's largest economy.

Traders have been hoping for a clear resolution to the crisis at a summit this weekend between European leaders. The latest reports made that appear less likely.

A drawn-out crisis could hurt the euro by tipping Europe's economy back into recession. Germany lowered its 2012 growth forecast to 1 percent from 1.8 percent Thursday, sending its main share index down 2.5 percent.

The euro fell sharply against the yen, British pound and Swiss franc.

In other trading, the pound fell to $1.5722 from $1.5764 late Wednesday. The dollar fell to 0.9005 franc from 0.9032 late Wednesday.

The dollar rose to 1.0217 Canadian dollar from 1.0194 late Wednesday. It rose to 6.6690 Swedish krona from 6.6067.

Copyright 2011 The Associated Press.