RTTNews - The dollar sputtered versus other majors on Monday, giving back most of its early gains versus the euro and sterling after the Institute for Supply Management said that activity in the service sector contracted for the ninth consecutive month in June.

Also, the greenback hit a five week low versus the yen after the Bank of Japan upgraded its regional economic assessment for the first time in three years. The central bank said economic conditions in the Japanese economy continued to be severe, but they started to stop worsening amid the slowing pace of deterioration.

The dollar dropped to 94.65 against the yen, its lowest level since June 1. Still, the pair has seen relatively little movement over the past two months, holding between 94 and 98.

The dollar edged higher in early dealing versus the euro after China reiterated its call for a stable dollar, quieting talk of a potential new international currency. However, the buck faded despite some better than expected service sector figures. By mid-day, the dollar pulled back to 1.3920 after hitting a 2-week high of 1.3870.

Against the sterling, the dollar retreated to 1.6210 after hitting a monthly high of 1.6095 in early dealing.

While the Institute for Supply Management released a report on Monday showing that activity in the service sector contracted for the ninth consecutive month in June, the pace of contraction slowed by even more than economists had been expecting.

The ISM said its index of activity in the service sector rose to 47.0 in June from 44.0 in May, although a reading below 50 indicates a contraction. Economists had been expecting the index to come in at 46.0.

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