Investment capital started pouring out of the euro zone in April, while the monthly average capital flow over the previous six months had been positive, European Central Bank data showed on Friday.

Market analysts have said much of last year's euro strength can be explained by combined direct and portfolio investment inflows into the euro zone and some now say a reversal of that trend could signal an end to the euro's strength.

"This is at least another warning sign that the strength of the euro is by far not any longer that well supported as probably the upward trend was," said Mr Michael Klawitter, senior currency strategist at West LB in London. "And obviously the sharp sell-off we've seen in euro/dollar over the past couple of days is pretty much confirming this."

The euro hit all-time highs above $1.19 in May and June after it started rallying versus the dollar roughly a year ago, but has since retreated to levels around $1.14.

Net combined direct and portfolio investment swung to a €14.4 billion outflow in April, from a revised €11.0 billion inflow in March, monthly balance of payments data showed.

But over the six months to March, the euro zone had averaged a monthly inflow of 6.1 billion, and the cumulated total over the 12 months ending April was a €84.9 billion inflow.

"Combined direct and portfolio investment registered net outflows of €14.4 billion in April 2003, mainly as a result of significant net outflows in direct investment [€19.8 billion\]," the Central Bank said in a statement.

The current account plummetted to a deficit of €8.1 billion in April from a €1.4 billion surplus in March.