Dollar rises on continued worries about consumers

NEW YORK — The dollar rose Monday as investors continued to worry about consumer spending, while the Federal Reserve said most banks expect their lending to remain tight through the second half of next year.

In late trading Monday, the 16-nation euro fell to $1.4085 from $1.4170 late Friday, while the British pound slid to $1.6340 from $1.6506.

The dollar slipped to 94.49 Japanese yen from 94.87 yen.

A key report showed Friday that American consumer confidence was weaker than expected in early August. Coupled with disappointing retail sales data, the report gave investors more reason to fear growth in the world's largest economy will remain tepid for some time even once the recession is technically over.

Traders got more bad news about the consumer Monday when home improvement retailer Lowe's Cos. said poor weather and cautious spending caused sales to fall 19 percent in the second quarter. The company's results missed analysts' forecasts.

Consumer spending is crucial for the economy to emerge from recession as it accounts for two-thirds of all U.S. economic activity.

Stocks fell by the sharpest amount in six weeks and Treasury prices soared Monday. Worries about the economy drive investors to the relative safety of the U.S. currency and government bonds.

Meanwhile, the Fed's latest survey of loan officers found that about 20 percent of U.S. banks tightened their lending standards on prime home mortgages in the April-June quarter, down from around 50 percent in the previous quarter and a peak of about 75 percent a year ago.

Most of the banks polled expect their standards for all types of loans to remain tighter than average levels over the past decade through at least the second half of 2010.

Getting banks to boost lending is critical to a sustained economic recovery.

In other late trading Monday, the dollar rose to 1.0782 Swiss francs from 1.0747 francs, and jumped to 1.1052 Canadian dollars from 1.1015.