Dollar Mixed on Jobless Claims, Gov't Debt Auction

The dollar fell against the euro but edged up against the pound Thursday after a report showed the tally of newly laid-off people requesting jobless benefits fell last week, while robust demand at an auction for Treasury debt eased fears that the government would have to pay higher interest rates to entice buyers.

The Labor Department said the number of initial claims for unemployment insurance dropped to a seasonally adjusted 623,000, from a revised figure of 636,000 in the previous week. It was below analysts' estimates of 635,000. Still, the number of people continuing to receive unemployment benefits rose to 6.78 million — the largest total on records dating to 1967 and the 17th straight record-high week.

In a separate report, the government said demand for big-ticket manufactured goods in April posted their second increase in three months, which may be signaling that the deep recession in manufacturing is bottoming out.

The government also said sales of newly built homes were flat in April. And an industry report said a record 12 percent of homeowners with a mortgage were behind on their payments or in foreclosure.

Foreigners' demand for U.S. government debt eased concerns that the government would have to pay higher interest rates on long-term bonds, which would drive up borrowing costs for consumers buying cars and homes. Inflation could endanger an economic recovery and would eat away at the dollar's value.

In late New York trading, the 16-nation euro advanced to $1.3962 from $1.3919 late Wednesday. The British pound fell to $1.5953 from $6043 after Britain's financial services regulator revealed some of the parameters it used in the recent stress tests of British banks, adding that it has greatly increased the use of such tests in recent months but — unlike the U.S. Federal Reserve — declined to reveal the results.

Credit ratings agency Standard & Poor's had cut the British government's outlook to "negative" from "stable" last week because of its projected debt burden. The British government, like the U.S. government, is running massive deficits as it spends billions to try to jump-start its economy out of recession.