The dollar fell to seven-month lows against the euro on Thursday after Ben Bernanke, chairman of the Federal Reserve, prepared the markets for a halt in the US rate-tightening cycle that began in June 2004.

China, meanwhile, moved to tackle a surge in new bank loans and investment by lifting its benchmark one-year lending rate by 0.27 of a percentage point to 5.85 per cent, sparking a brief sell-off in commodities and shares tied to the booming Chinese economy.