Dollar gains on economic outlook jitters

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Investors flocked to the dollar Tuesday as global markets tumbled and fears about the health of European banks compounded lingering economic woes.

What prices are doing: The dollar rose 0.06% versus the euro to $1.2186, and it gained 0.04% to $1.5062 against the British pound.

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Against the Japanese yen, the greenback lost 0.06% to ¥88.54.

The dollar was mixed against major currencies Monday after world leaders pledged to drastically cut deficits over the next few years.

What's moving the market: With the European Central Bank's year-long €442 billion lending program set to expire Thursday, investors worried that the global economic recovery could be derailed if private-sector banks are unable to pay back the central bank.

Fears that they won't be able to repay the money, as well as uneasiness about cutting off funding for banks that have become dependent on the liquidity, shook global markets Tuesday and sent investors to safe havens such as the U.S. currency and government-backed Treasurys.

Investors were also digesting economic data released Tuesday, looking for cues about the health of the U.S. economy.

The Case-Shiller index of home prices in 20 cities rose 3.8% on a year-over-year basis in April after climbing 2.3% in March, beating the 3.4% rise economists surveyed by Briefing.com had expected.

But the positive housing data was overshadowed by a report showing a slump in consumer confidence.

The Conference Board's consumer confidence index fell to 52.9 from 62.7 in May, the lowest level since March and a much bigger drop than the expected decline to 62.  To top of page

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