Dollar falls on lower growth (page 2 of 2)

However, the yen's rally was limited by worries about strained relations between Tokyo and Beijing after a third weekend of violent anti-Japanese protests in China.

Meanwhile, Japanese Prime Minister Junichiro Koizumi apologised for Japan's World War Two atrocities and said that he would meet his counterpart in a bid to repair ties that are at their worst in more than three decades.

Next week, markets will keep a close eye on Japan's inflation and unemployment data for clues on the outlook of the Japanese economy.

Range for this week: Y104.50-Y107.50

Sterling

The sterling tumbled against the dollar and the euro at the start of the week on data showing an accelerated fall in British house prices in the three months to March as fears of higher interest rates led to stagnant sales.

The Royal Institution of Chartered Surveyors said its seasonally-adjusted house price balance for March fell to -37 from a downwardly revised -34 in February. Moreover, the pound was under pressure as the minutes of the Bank of England's April meeting came in less hawkish than some in the market had expected.

The BoE's nine-strong Monetary Policy Committee voted 7-2 in favour of holding interest rates steady at 4.75 pct earlier this month, with only two MPC members voting for a 25 basis point rate hike.

As the week advanced, sterling reversed its losses after a surprisingly sharp rise in British inflation stoked expectations of higher interest rates. The consumer price index rose an annual 1.9 pct last in March, higher than the 1.7 pct increase predicted by analysts and the 1.6 pct rise in February.

The pound also got a further boost after data indicated that British first-quarter economic growth came in line with markets' forecast. Preliminary first quarter gross domestic product was up 0.6 pct from the previous quarter and 2.8 pct from the first quarter of 2004.

Meanwhile, the sterling hardly reacted to the British retail sales data that fell 0.1 pct in March, versus markets' expectations of a 0.4 rise.

Range for this week: $1.9000-$1.9300