Dollar rises despite negative economic data

The 15-nation euro slipped to $1.2655 in late New York trading from $1.2697 it bought late Tuesday, while the British pound fell to $1.4722 from $1.4876. Meanwhile, the dollar edged down to 93.09 Japanese yen from 93.22 yen.

The Institute for Supply Management, a trade group of purchasing executives, said Wednesday the nation's services sector contracted dramatically in November as slower spending hurt insurers, retailers and hotels. Meanwhile, the Labor Department reported that productivity growth slowed in the third quarter.

Also Wednesday, the Federal Reserve's survey of regional business conditions, known as the beige book, showed Americans hunkered down heading into the holidays, leaving retailers with lower sales and forcing factories to cut back on production.

The major equity indexes fluctuated throughout the session as more negative economic data came out. Investors were initially disheartened by each piece of news but shook off their disappointment, and the Dow Jones industrial average rose more than 170 points.

The blue chip index has gained more than 442 points in the past two sessions, wiping out more than half of Monday's nearly 680 point slide.

Both the European Central Bank and the Bank of England are expected to cut their interest rates Thursday to support their slumping economies.

While many observers think the ECB will reduce its benchmark rate by half a percentage point to 2.75 percent--with some thinking it may cut it by three quarters of a point_ the Bank of England is expected by many to lower its rate by a whole percentage point to 2.00 percent, which would be equal to its lowest level since the bank was founded in 1694.

Though lower interest rates can jump-start a nation's economy by encouraging lending, they often weigh on its currency as traders transfer funds to other currencies with higher returns.

In other New York trading, the dollar edged higher to 1.2141 Swiss francs from 1.2072 late Tuesday, and rose to 1.2605 Canadian dollars from 1.2539.