The euro hit lifetime lows against the yen and looked likely to do the same against the dollar yesterday as investors worried that Europe's economic recovery could be undermined.

The single currency fell to a new low of 106.48 yen, down nearly 20 per cent in the year to date, before clawing back some losses to trade around 106.65 yen by mid-afternoon in Europe.

Against the dollar, it slipped as low as $1.0207, within a shiver of the $1.0104 lifetime low set in July. It then edged back up to cling around $1.0220 after the US growth figures.

At yesterday's close, the euro was worth £0.6320 sterling, which implies a pound closing rate against the British currency of 0.8025 sterling compared with 0.8027 a day earlier.

The euro's decline is blamed on a host of factors ranging from fresh interest in Japanese assets amid optimism on that economy to worries about the investment climate in Germany because of some high-profile government interventions.

The euro dismissed an upbeat forecast from the European Union, which raised its growth forecast for the 11-nation euro zone to 2.9 per cent for 2000 from 2.7 per cent previously.

The yen was steady against the dollar after a slew of supportive comments from Japanese officials in Japan overnight.