The 12-nation currency fell to US$1.1711 in morning European trading, its lowest level since trading at US$1.1631 on Nov. 13, 2003 and down from US$1.1793 late in New York the night before.

The dollar also rose slightly against the Japanese yen to 117.83 yen from 117.62 the night before, and the British pound dropped to US$1.7368 from US$1.7434.

The dollar built on gains against the euro from last week, when the U.S. Federal Reserve raised interest rates to 4 percent, the highest level in more than four years, and there were indications it would continue with its measured increases.

"The currency market is still focused primarily on interest-rate differentials," said Tetsuhisa Hayashi, head of foreign exchange trading at Bank of Tokyo-Mitsubishi, adding that the euro may head down toward US$1.15 later this month.

The market has also been affected by uncertainty over which policies a new coalition government in Germany will follow, and rioting in France, the worst civil unrest in the country in decades.

Overnight into Tuesday the violence continued for a 12th straight day, as rioters in the southern city of Toulouse ordered passengers off a bus and then set it on fire and pelted police with gasoline bombs and rocks. Youths also torched another bus in the northeastern Paris suburb of Stains.

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