Sept. 3 (Bloomberg) -- The euro weakened from the day’s high versus the dollar as European Central Bank President Jean- Claude Trichet said the economic recovery will be bumpy. “There’s probably some disappointment that they didn’t upgrade growth more,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “Evidently the market was looking for something a bit more hawkish.” The yen declined against major counterparts as U.S. service industries contracted in August at a slower pace, encouraging Japanese investors to sell their currency and buy higher- yielding assets elsewhere. Sweden’s krona fell against the euro after the nation’s central bank repeated its outlook for rates to stay on hold. The euro was little changed at $1.4266 at 11:04 a.m. in New York, compared with $1.4264 yesterday, after earlier rising as much as 0.6 percent to $1.4348. The yen declined 0.4 percent to 132.07 versus the euro, from 131.54. The dollar advanced 0.4 percent to 92.56 yen, from 92.22. ECB officials are in no rush to withdraw emergency stimulus, Trichet said at a press conference in Frankfurt after policy makers kept the main refinancing rate at a record low of 1 percent. While the central bank today boosted its forecasts and now expects the economy to expand over all of next year, the recovery “is expected to be rather uneven.” Trichet added it has no plans to increase the rate it charges banks at its unlimited auctions of 12-month funds. In the U.S. the Federal Reserve signaled in minutes published yesterday that it’s trying to prepare investors for an end to some of its asset purchases. ‘Being Dovish’ “The fact they’re keeping a 1 percent rate for the 12- month repo operation shows they’re being dovish, which means the euro temporarily lost a bit of ground,” said David Deddouche, a foreign-exchange strategist at Societe Generale SA in Paris. Trichet will discuss exit strategies and prospects for the global economy when he meets with officials from the Group of 20 nations in London tomorrow. Retail sales in the region declined in July for a 14th straight month. Store revenue declined 1.8 percent from a year earlier after sliding 2 percent in June, the European Union’s statistics office in Luxembourg said. Economists predicted a drop of 2.2 percent, according to a Bloomberg survey. The krona weakened 0.2 percent to 10.3147 against the euro, after falling as much as 0.5 percent following the decision by the Riksbank, which left its main rate at 0.25 percent and said it will provide 100 billion kronor ($13.8 billion) in loans to the nation’s banks to help lower lending rates. Yen Versus Rand The yen fell 1 percent to 11.9330 versus the South African rand on speculation investors will increase carry trades, in which they borrow in a nation where interest rates are low and invest where returns are higher. Japan’s target lending rate of 0.1 percent compares with 7 percent in South Africa. The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 48.4, the highest level in 11 months, from 46.4 in July, according to the Tempe, Arizona-based group. Readings below 50 signal contraction. Even as the U.S. economy is showing signs that it’s beginning to recover from its worst recession since the Great Depression, U.S. Treasury Secretary Timothy Geithner told reporters yesterday in Washington that it’s “too early” for the G-20 to scale down efforts to boost growth. To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Anna Rascouet in London arascouet@bloomberg.net

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