Dollar loses ground on service industry, bank reports despite attempts to prop up greenback

Dollar lower on service industry, bank reports

NEW YORK — The dollar traded lower against major currencies Monday despite attempts over the weekend to boost the strength of the American currency.

An upgrade of large banks and a report that the service sector grew for the first time in more than a year provided a boost for confidence in the economy, prompting investors to leave the safe haven of the dollar for riskier assets.

The 16-nation euro climbed to $1.4661 in late afternoon trading from $1.4588 it bought late Friday. The pound edged up to $1.5947 from $1.5919, while the dollar slipped to 89.51 Japanese yen from 89.63 yen.

The Institute for Supply Management said its service index rose to 50.9 in September from 48.4 in August. Analysts polled by Thomson Reuters had expected a reading of 50, the dividing line between growth and contraction.

The index tracks more than 80 percent of the country’s economic activity and hasn’t grown since August 2008.

Meanwhile, Goldman Sachs raised its rating on big banks and the price of oil jumped.

The dollar weakness came even after finance ministers from the Group of Seven wealthy nations talked up the currency amid fears it could fall farther and disrupt the global economy.

U.S. Treasury Secretary Timothy Geithner and France’s Christine Lagarde stressed the need for a strong dollar.

Geithner said it’s “very important for the U.S. that we continue to have a strong dollar,” while Lagarde said “we need to have a strong dollar … volatility is not welcome.”

The finance ministers’ closing statement after their meeting Saturday in Istanbul did not mention the dollar’s role specifically but said that “excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.”

In other late trading Monday, the dollar dropped to 1.0697 Canadian dollars from 1.0830 Friday, and fell to 1.0313 Swiss francs from 1.0345 francs.