NEW YORK — The U.S. dollar mostly rose Wednesday after a ratings reduction on Portugal's debt to junk status triggered nervousness in European financial markets.
Borrowing costs increased in Spain and Italy as investors worried about the financial stability of other indebted countries, and stock markets slid across Europe.
"The move is a stark reminder that problems in the periphery of the eurozone are not solely in Greece," said Capital Economics analyst Emilie Gay. Greece's debt crisis and worries about a possible debt default has made euro trading very volatile since late April.
The euro fell to $1.4318 in midday trading in New York from $1.4410 late Tuesday. Since peaking just under $1.50 in the first week of May, the euro has ranged widely because of worries about possible debt defaults and slowing growth, falling below $1.40 last month.
Also helping the dollar Wednesday was China's move to cool inflation and slow growth by raising its key interest rate. A sharp slowdown in the world's No. 2 economy could hurt the world's big exporting companies and commodity producers that sell goods to China.
The British pound fell to $1.5994 from $1.6047, and the dollar rose to 96.55 Canadian cents from 96.29 Canadian cents.
Against a group of six major currencies, the dollar was up about 0.5 percent.
Investors often seek the safety of the dollar when they're worried about slowing global growth. The yen and Swiss franc also tend to get a safe-haven boost against the rest of the world's currencies.
So the dollar dropped to 80.85 Japanese yen from 81.04 yen, and also fell to 0.8384 Swiss franc from 0.8404 Swiss franc.