The euro reaches a record high against the dollar, as credit woes batter
stocks.

FRANKFURT, GERMANY (MARCH 13, 2008)(REUTERS) - While the euro soared to record highs against the dollar, European
shares fell sharply on Thursday (March 13) as soaring oil prices threatened to
bite into company profits; banks fell as investors returned to Earth after a
two-day orbit fuelled by central bank liquidity injections.
    Europe's third-biggest bank, UniCredit, fell five percent after posting
slightly lower-than-expected 2007 profits. It said its exposure to U.S.
subprime was a "negligible" 164 million euros in December.
    Banks were the biggest weight on the index; Commerzbank was also down
5.3 percent.
    Data showing the U.S. economy is on the brink of recession put
additional pressure on financials, which are grappling with billions of
dollars of writedowns related to a crisis in the U.S. subprime mortgage
market.
    Setting the tone, U.S. stocks fell overnight and Japan followed suit as
a new record on oil prices, above $110 a barrel, raised fears of further
strains on corporate profits.
    Oliver Roth, from Close Brothers Seydler in Frankfurt, said that the
high oil price and high euro were also going to have negative effects on the
German economy.
    "If you look at the long term effects then it will obviously be a
burden to German exporters. Both the oil price, which is rising continually,
as well as the high euro against the dollar. In the mid- and long-term this is
a problem for German exporters," said Roth.
    The dollar dropped to a 12-year low against the yen and a record low
versus the euro on Thursday, sliding on doubts about the effectiveness of the
Federal Reserve's efforts to aid strained credit markets and limit the damage
to the U.S. economy.
    The dollar fell as low as 100.95 yen on electronic trading platform
EBS, the lowest since late 1995 and slumped to an all-time low against the
euro of $1.5575.
    The slide came despite remarks from U.S. President George W. Bush on
Wednesday that he would like to see a stronger dollar and expressed concern
its falling value was one cause of soaring U.S. energy prices.
    Roth in Frankfurt commented: "If you buy options in oil in euros,
then you can certainly make some money, but you shouldn't forget that many
investors who invested in dollars are now buying oil to try and recoup their
losses due to the dollar falling against the euro." 
    The Carlyle Capital Corporation, an affiliate of private equity firm
Carlyle Group, said late on Wednesday that its lenders are likely to take
possession of its remaining assets after it was unable to reach a mutually
beneficial agreement to stabilise its financing. The news provided another
sign of stress in global credit markets.