European debt woes, Chinese rate hike boost dollar

NEW YORK — The U.S. dollar is rising against the euro after a ratings reduction on Portugal's debt to junk status triggered nervousness in European financial markets.

Borrowing costs increased in Spain and Italy as investors worried about the financial stability of other indebted countries, and stock markets slid across Europe.

China also increased its key interest rate in an effort to cool inflation and slow growth. A sharp slowdown in the world's No. 2 economy could hurt the world's big exporting companies and commodity producers that sell goods to China.

The euro fell to $1.4324 in morning trading in New York from $1.4410 late Tuesday. The dollar also rose against the British pound, but slipped against the Japanese yen.

Investors often seek the safety of the dollar when they're worried about slowing global growth.