Declining demand for the dollar sent it lower against 12 of the 16 major currencies tracked by Bloomberg, including the Swiss franc and the British pound. The explosions killed at least 26 people and injured as many as 450, Interior Minister Abdulkadir Aksu said. The blasts damaged the British consulate and the offices of London-based HSBC Holdings Plc.

``A terrorist attack is a shock to the financial system, which leads to a reduction in risk taking in a country's'' assets by foreign investors, said Jason Bonanca, a currency strategist at Credit Suisse First Boston in New York. ``Large debtor countries like the U.S., which is the world's largest debtor, see their currencies fall in such an environment. It is because of intense risk aversion.''

As of 10:30 a.m., the dollar had weakened to $1.1918 per euro from $1.1878 late yesterday. It fell to 108.77 yen from 109.32. The Swiss franc, which is viewed as a haven in times of crisis, strengthened to 1.2987 per dollar from 1.3047. The pound rose to $1.7041 from $1.6973. Treasury bonds and gold rose.

Turkey, the only majority-Muslim country in the North Atlantic Treaty Organization, offered to send peacekeeping troops to neighboring Iraq and wants to join the European Union. Its constitution requires the separation of the state from religious institutions.

U.K. Foreign Secretary Jack Straw said today's attacks had ``all the hallmarks'' of past attacks orchestrated by the al- Qaeda terrorist network.

False Alarm

The dollar briefly weakened to $1.1969 as the White House was evacuated just before 9:30 a.m. after an airplane came within five miles of the executive mansion. The pilot was contacted and the situation resolved.

Concern that more terrorist attacks and a prolonged conflict in Iraq will weigh on business and consumer confidence, limiting spending by both parties, is hurting the dollar. The dollar lost 6.6 percent in the first five months of the year against the euro, during the build up and aftermath of the war in Iraq.

``The thinking is that any type of terrorist activity will negatively impact U.S. growth, leading to lower returns on U.S. assets,'' said Alejandro Urbina, a currency strategist in Chicago at Bank One Corp. who used to work at the Federal Reserve Bank of Chicago.

The dollar fell even after the U.S. Labor Department said claims for state unemployment benefits fell last week to a level that is close to the lowest in three years. The less-volatile four-week average dropped to the lowest since February 2001, suggesting a growing reluctance among U.S. companies to fire workers as the economy strengthens.

Leading Indicators

The index of leading U.S. economic indicators rose in October for the fifth time in the last six months, suggesting the economy will continue to expand through early next year.

``The focus this morning is on the blasts in Turkey,'' said Bank One's Urbina.

At noon, the Federal Reserve Bank of Philadelphia may report its regional manufacturing index showed growth for a sixth straight month, according to a separate survey of economists. The index probably registered at 25 for November after 28 in October. Readings greater than zero indicate expansion; the October index was the highest since July 1996.

Comments by French Finance Minister Francis Mer, which suggested he isn't concerned about the 12 percent decline in the dollar's value against the euro this year, exacerbated the currency's decline today, analysts said. Mer said France's economy, Europe's third-largest, is growing fast enough to make up for a drop in exports caused by the euro's advance.

European Growth

``The issue of the dollar being too weak is of secondary importance compared with the economic recovery,'' Mer said in an interview with French television channel LCI.

Germany's biggest increase in exports in almost three years and a recovery in French consumer spending helped the two largest Euro-region economies return to growth, government reports today showed.

Europe's $8 trillion economy grew 0.4 percent in the third quarter from the second, the fastest pace in five quarters, rebounding from a contraction in the second quarter, the European Union's statistics office estimated last week.

Japan's Cabinet Office today raised its evaluation of the economy as a rebound in the U.S., Europe and Asia spurs exports and business spending, helping sustain seven quarters of growth in the world's second-biggest economy, the government said in its monthly economic assessment released in Tokyo.

`Stronger Yen'

``The trend remains for a stronger yen, based on positive economic data, equity inflows and a current-account surplus,'' said Michael Woolfolk, a senior currency strategist at the Bank of New York, the third-largest New York-based bank. ``The only thing putting a break in the move is the Bank of Japan.''

Japan's central bank sold yen yesterday after it reached 107.56 per dollar, the strongest since November 2000, said a currency trader who deals with the BOJ and spoke on condition he not be identified.

Nikkei English News reported the Bank of Japan sold 1 trillion yen ($9.15 billion, without saying where it got the information. An official at the Ministry of Finance, which instructs the BOJ to buy and sell, declined to comment.

The dollar may weaken further. China, the third-biggest international investor in Treasuries, may sell some of its holdings because of U.S. restrictions on trade, pushing down the dollar, according to research by Royal Bank of Canada.

Federal Reserve Chairman Alan Greenspan today said protectionist policies may destabilize the world economy and result in greater disruption of global financial markets as imbalances such as the U.S. current account deficit correct.

China Policy

``The costs of any new such protectionist initiatives, in the context of wide current account imbalances, could significantly erode the flexibility of the global economy,'' Greenspan said in the text of a speech to an annual Monetary Conference sponsored by the Cato Institute and The Economist magazine. ``It is imperative that creeping protectionism be thwarted and reversed.''

The U.S. needs about $1.5 billion a day in overseas investment to fund the gap in its current account, the broadest measure of international trade.

``News that China may retaliate over tariffs'' on Chinese textiles ``is euro-positive,'' said Adam Myers, a currency strategist in London at Westpac Banking Corp. ``Lots of thing are lining up on the radar screen to suggest the euro will go higher.''