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Those worries weighed on the dollar, which fell to $1.4571 per euro, according to Reuters data, the lowest level since the euro was launched in 1999. It last traded at $1.4554, up 0.7 percent on the day.

The dollar index, which tracks the greenback's performance against a basket of six major currencies, dipped to 75.986, the lowest in its more than 30-year history.

"Throughout the banking system there is a real belief that a lot of U.S. banks haven't come clean yet on what their exposures are to this subprime fallout and, as a result, the view is that the Fed will have to cut rates again at the December meeting," said Greg Salvaggio, senior currency trader at Tempus Consulting in Washington.

Interest rate markets see a more than 60 percent chance of another Federal Reserve interest rate cut in December. The Fed cut rates by a half point in September and another quarter point last week, leaving them at 4.5 percent.

Gold rose $16.80, or 2.08 percent, to $822.90, its highest level in 28 years, drawing support from strong oil prices, a weak dollar and general safe-haven buying.

In the U.S. Treasury market, the benchmark 10-year note was down 10/32 in price for a yield of 4.37 percent. The 2-year note fell down 2/32, with the yield at 3.70 percent.

(Additional reporting by Lucia Mutikani, Ellis Mnyandu, Robert Gibbons, and John Parry)