UPDATES ON SEPT 2 2008

SEPT 2 TUESDAY

Dollar Rises to Six-Month High Against Euro as Oil Price Drops .

The dollar rose to its highest since February against the euro

on speculation oil prices near a four- month low will support

economic growth in the U.S., the world's largest energy

consumer.

The U.S. currency advanced to its strongest level in more than

two years versus the British pound as Hurricane Gustav

weakened before making landfall in Louisiana. Australia's

dollar slid to its lowest level in almost a year as economists

predict the country's central bank will lower interest rates

today for the first time since 2001.

Crude oil for October delivery fell as much as 4.2 percent to

$110.60 a barrel, the lowest since May 1. The euro-dollar

exchange rate and oil had a correlation of 0.9 in the past

year, according to Bloomberg calculations. A reading of 1

would mean they moved in lockstep.

The yen rose to 91.39 versus the Australian dollar, the

strongest in five months, on speculation an interest rate

cut from Australia's central bank will prompt traders to

pare holdings of higher-yielding assets funded with Japan's

currency. The yen also gained to a three-week high of

74.69 versus the New Zealand dollar and to 192.68 against

the pound, the strongest since March 17.

U.K mortgage approvals dropped to the lowest level in nine

years and manufacturing contracted, data showed yesterday,

adding to evidence of a looming recession.

The Bank of England will keep interest rates unchanged at 5

percent on Sept. 4, according to a Bloomberg News survey of

economists. Traders are paring bets on higher borrowing

costs in the U.K. The implied yield on the March short-

sterling futures contract fell to 5.06 percent yesterday

from 5.5 percent at the start of August.