The dollar strengthened against the euro but fell against the yen on Thursday amid continuing fears in credit markets and falling stocks.

The dollar rose 0.3 percent to $1.4613 per euro at 2:03 pm in New York while falling to 0.7 percent to 110.69 yen.

News about damage to financial markets continues to unsettle investors.

Credit analysts at Standard & Poor's cut the ratings of investment bank Bear Stearns with the anticipation that it will post the first loss in company history. A report also indicated the Citigroup could see additional losses in the fourth quarter related to the subprime housing crisis.

The economic environment has led traders to reduce yen carry trades, which involves borrowing the low yielding Japanese currency to buy higher yielding denominations.

The dollar has fallen nearly 10 percent against the euro in 2007 amid concern over rising inflation due to recent interest rate cuts to 4.5 percent by the Federal Reserve.