Euro powers above $0.95

LONDON, England (CNN) -- The euro rose to a 17-month high against the dollar on Wednesday as investors sold U.S. stocks amid persistent gloom on Wall Street.

The euro rose above the psychological 95 U.S. cent level for the first time since January 2001, before slipping back to 94.85 cents. The euros also hit a new five-month high against the yen, reaching 119 yen.

Wall Street has been gripped with concerns about corporate earnings and accounting standards. The Dow Jones industrial average closed at its lowest level since November on Tuesday.

"Global investors have too many U.S. assets and they are currently disposing of them," Steve Barrow, currency strategist at Bear Stearns, told CNN. "But they would have been selling even if stocks were going up."

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"There is an element of negative psychology towards the dollar and the euro is rising out of default. A basket of currencies have weakened over recent months for different reasons. We have a weak dollar, weakness in the Swiss franc, sterling and yen, that will continue and the euro will be the beneficiary."

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Japanese authorities have sold the yen on four days since late May, amid concerns that a strengthening currency could harm the country's tentative recovery. Meantime, the British pound has come under pressure amid speculation that Prime Minister Tony Blair may call a referendum to join the single currency next year.

Barrow argues that growth is still sluggish in the eurozone and there are inherent political problems with governments struggling to meet conditions for euro entry.

But he is still "bullish" and expects the euro and dollar to reach parity by the end of 2002. The euro has risen 7.5 percent this year from 88.30 euros on December 31 and soared 11 percent from a low for the year of 85.40 cents, recorded on February 1.