The European single currency hit a near 7-month dollar high on Friday on expectations of more US stimulus spending, in turn pushing gold to a fresh record, dealers said. At about 11:35 SA time, the euro struck 1.3764 dollars, the highest level since March 17 and compared with 1.3634 dollars in New York late Thursday. The faltering dollar pushed gold to a record $1 317.42 dollars per ounce on the London Bullion Market. "The economic data out of Europe has been fairly uninspiring this morning and the sovereign debt issues are still bubbling away," said GFT analyst David Morrison. "Consequently, it's probably fair to say that it's the expectation of further quantitative easing (QE) from the US Federal Reserve that continues to undermine the dollar and lift the single currency." The dollar has faced strong selling pressure ever since the US central bank hinted last month at more stimulus spending if the tepid US economic recovery cools further. Morrison noted that "QE involves the creation of new dollars by the Fed, which are introduced into the system through the purchase of Treasuries (bonds), mortgage-backed securities and perhaps other assets. "By creating these fresh dollars, the Fed dilutes the purchasing power of the existing dollars, devaluing the currency." Gold jumped meanwhile on the back of the weak US unit, which makes the dollar-priced metal cheaper for buyers using stronger currencies and so tends to stimulate demand and prices. "The greenback is taking more losses so (gold prices) are gaining across the board," VTB Capital analyst Andrey Kryuchenkov told AFP. "Gold sentiment is upbeat and is likely to stay so until we hear more (on) ... QE2," he added. Against the Japanese currency on Friday, meanwhile, the dollar dipped to 83.22 yen from 83.46 yen late on Thursday. Players remained wary of the possibility of more market intervention from Japanese authorities to weaken the yen. Japan stepped into the currency markets on September 15 for the first time since 2004 in a unilateral move to dampen the yen's rise after it hit a fresh 15-year high of 82.86 against the dollar. Elsewhere on Friday, sterling hit a four-month low against the euro after news of weaker-than-expected British manufacturing activity. Markets are now braced for US manufacturing data later Friday, as the latest gauge of the health of the world's biggest economy. In London, the euro changed hands at 1.3751 dollars against 1.3634 dollars late in New York on Thursday, at 114.39 yen (113.81), 0.8673 pounds (0.8675) and 1.3432 Swiss francs (1.3397). The dollar stood at 83.22 yen (83.46) and 0.9774 Swiss francs (0.9825). The pound was at 1.5848 dollars (1.5713). On the London Bullion Market, the price of gold rallied to $1 313.88 an ounce from $1 307 an ounce late on Thursday. - Sapa-AFP

Source