Euro drops below $1.25 on growth concerns

BERLIN (AP) - The euro continued its decline against the U.S dollar on Friday, dropping below $1.25 amid worries over the cost and economic impact of an emergency financing deal for indebted European countries.

The 16-nation euro had taken a breather in early trading after sliding to $1.2520 in New York late Thursday, but then resumed its decline. It slid as low as $1.2433, its weakest since November 2008, before climbing back to $1.2466 in afternoon European trading.

The emergency financing deal sealed last weekend initially pushed up the euro. However, concerns over the cost to European countries and the strangling effect of cuts in government spending on stagnant or shrinking economies have weighed on the currency in the days since then.

The European Central Bank is now also more likely to be one of the last central banks of the major economies to raise interest rates, analysts say. Raising rates tends to increase the value of a currency.

In an interview published Friday, European Central Bank President Jean-Claude Trichet dismissed suggestions that the bank's decision to buy government bonds might stoke inflation. Higher inflation would create pressure to raise rates.

The British pound slid to $1.4516 on Friday from $1.4609 late Thursday. The dollar was down to 92.43 Japanese yen from 92.72 yen.