The US dollar struck a 2-year high against the euro while the yen hit a near 6-year peak against the European single currency as investors bailed on bets on higher-yielding and emerging market currencies built up in recent years.

The euro slipped 0.3 per cent from late US trade to $1.2815 . In early Asian trade, the European single currency fell as low as $1.2726, its lowest since November 2006, on trading platform EBS. The euro slid as low as 124.15 yen, its lowest since January 2003, before rising to 125.00 yen, down 0.5 per cent on the day.

Analysts at banks such as Citigroup and Morgan Stanley expect the yen to continue strengthening as Japanese banks and investors slash their overseas exposure, though economic conditions in Japan itself are deteriorating.

Japan's trade data showed exports in September were much weaker than expected, with exports to the United States down 11 per cent from the same month last year.

"Demand is weakening across the globe. Not to mention the United States, falls in exports to the European Union are accelerating," said Junko Nishioka, an economist with RBS Securities in Tokyo. "Rising anxiety over the financial sector appears to have affected economic activity."

US light crude oil prices clung to small gains, up 43 cents at $67.18 a barrel, after hitting a 16-month low of $66.20. Oil prices have fallen by a third in October in anticipation of a steeper decline in demand from big consumers such as the United States and China.

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