Euro falls in London trade

The euro fell on Monday against the dollar and yen after the European Central Bank conducted its third consecutive liquidity-providing operation in eurozone money markets while the yen strengthened and high-yielders slipped.
Having taken the lead among global central banks last week in pumping funds into the global banking system to stave off a short-term liquidity freeze, the ECB acted again on Monday.
It injected 47.67 billion euros into the eurozone money markets in a one day tender on Monday to replace Friday's special three-day tender for 61.05 billion euros.
These operations helped calm financial markets rattled by spreading jitters about big bank and fund losses emanating from distress in the US subprime mortgage market and the added supply of euros helped push it lower.
High-yielding currencies such as the UK pound and New Zealand dollar also continued a weak run, while the yen rallied as nervous investors unwound carry trades where low-yielding currencies had been sold to fund purchases of higher yielding assets.
US retail sales data is due out at 1230 GMT but investors are continuing to take cues from money markets, credit markets and overall risk aversion. "Data is taking a back seat as continued lower risk appetite continues to be the dominant theme," said Tom Levinson, FX strategist at ING.
At 1133 GMT the euro was down a third of a percent on the day against the dollar at $1.3648. The euro was down 0.5 percent against the yen at 161.24 yen, approaching a four-month low around 160 yen hit on Friday. The dollar slipped 0.25 percent against the yen to 118.09 yen, holding off the four-month low of 117.19 yen hit on electronic trading platform EBS last week.
The pound was down 0.5 percent versus the dollar to $2.0131 after hitting its lowest level in five weeks earlier in the session. The New Zealand dollar was down 1 percent to $0.7381. Risk appetite continues to remain high despite rebounding stock markets as investors continue to worry about troubles in the credit market sparked by problems in the subprime mortgage market.
"Risk aversion is deeply entrenched as the unfolding events in the structured credit and subprime markets spill over into the real economy, which has hit high-yielders," Michael Klawitter, currency strategist at Dresdner Kleinwort said.
Until liquidity fears really started to grip markets last week, investors were convinced the ECB was on track to raise rates to 4.25 percent next month. These expectations fell below 50-50 on Friday, however, and on Monday were back up around 65 percent.
While the euro slipped on news of the ECB's latest liquidity injection and global equity markets staged a short-term recovery from last week's turbulence, financial market participants remained on edge.