By Ye Xie Nov. 18 (Bloomberg) -- The dollar pared its decline against the euro as a government report showed U.S. housing starts unexpectedly fell in October, discouraging demand for higher- yielding assets. Sterling slid from almost a two-month high against the euro after minutes of this month’s Bank of England meeting showed the vote to increase the bond-purchase program by 25 billion pounds ($42 billion) wasn’t unanimous. The dollar slid 0.4 percent to $1.4939 per euro at 8:56 a.m. in New York, from $1.4876 yesterday, after earlier losing 0.6 percent. The euro increased 0.3 percent to 133.23 yen, from 132.77. The dollar traded at 89.19 yen, compared with 89.25. Recovery from the deepest U.S. recession since the 1930s will be “gradual and bumpy,” Federal Reserve Bank of Cleveland President Sandra Pianalto said yesterday in Columbus, Ohio. U.S. housing starts dropped last month to an annual rate of 529,000, from a revised 592,000 in September, the Commerce Department reported today in Washington. The median forecast of 77 economists in a Bloomberg survey was for an increase to 600,000 from a previously reported 590,000. The pound depreciated for the first time in five days against the euro, weakening 0.5 percent to 88.88 pence. Sterling reached 88.34 pence yesterday, the strongest level since Sept. 15. The pound was little changed at $1.6813. While the majority of Bank of England’s nine-member Monetary Policy Committee voted to extend the bond-purchase program to 200 billion pounds, Chief Economist Spencer Dale favored no change and David Miles sought a 40 billion pound expansion, minutes of the Nov. 5 meeting published in London today showed. They unanimously kept the benchmark interest rate at 0.5 percent. Central bank measures to weaken the pound may backfire as “smart longer-term overseas investors sense an opportunity” to buy U.K. assets, Neil Jones, head of European hedge-fund sales in London at Mizuho Corporate Bank, wrote in an e-mail message. “Reserve deposit-rate reductions and further quantitative easing will again shift cash into stimulating asset prices.” To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net

Source