urrencies used to fund investments elsewhere, a practice known as the carry trade.

``There is a general pessimism on the dollar right now,'' said Samarjit Shankar, director of global strategy for the foreign exchange group in Boston at Mellon Financial Corp. ``People are now concerned that the growth outlook heading into next year is on the down side.''

The dollar slid to $1.2941 per euro at 11:07 a.m. in New York, from $1.2844 yesterday. The U.S. currency is at its lowest since June 5 when it touched $1.2979 per euro. The dollar dropped to 116.55 yen, from 117.92. The euro traded at 150.82 yen, from 151.46 yesterday and a record high of 151.67 reached on Nov. 20.

The yen gained about 1.2 percent today, the biggest increase since April 24.

The U.S. currency fell against 14 of 16 major currencies after economic advisers to President George W. Bush yesterday cut their forecasts for growth next year.

The yen extended its gains against the euro after Luxembourg Prime Minister Jean-Claude Juncker, who's also chairman of the panel of finance ministers from the euro region, said a recent decline in the yen has been ``too rough.'' The Japanese currency has dropped 7.5 percent against the euro this year.

Economic Growth

U.S. economic growth will slow in 2007 because of a weaker housing market, Bush's economic advisers said in their semi- annual forecast. Gross domestic product will increase 2.9 percent next year, slower than the 3.6 percent forecast in June, the Council of Economic Advisers said.

Initial jobless claims increased by 12,000 to 321,000 in the week that ended Nov. 18 from the prior week's revised 309,000, the Labor Department said today in Washington. The four-week moving average, a less volatile measure, rose to 317,000 from 314,000.

The University of Michigan's final index of consumer sentiment slipped to 92.1 from 93.6 in October. The measure has averaged 88.1 since monthly data were first compiled in 1978. The Michigan index was expected to slip to 93.3 in November from the previous month's final reading of 93.6, according to the median estimate of 57 economists in a Bloomberg News survey.

`Unwinding' Trades

Juncker's comments and data indicating a slowing U.S. economy led traders to take off carry trade bets.

Some investors are ``unwinding'' carry trades, said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``That benefits the yen.''

Ten-year Treasuries yield 2.90 percentage points more than comparable-maturity Japanese government bonds, near the lowest since December.

Investors see a 34 percent chance the Fed will lower its target overnight lending rate between banks at its March 21 meeting, compared with 17 percent odds on Nov. 15, according to interest-rate futures prices. Policy makers left the rate on hold for the past three months, after 17 quarter-percentage point increases to 5.25 percent.

To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net ; Min Zeng in New York at mzeng2@bloomberg.net .