Gaza attack drags down greenback

The dollar dropped the most in more than a week against the euro on concern Israeli attacks on Hamas in the Gaza Strip will fan Middle East tensions and disrupt oil supplies to the US, the world's biggest energy consumer.

The US currency also slid versus the yen before housing and manufacturing reports this week that may show the world's largest economy is slipping further into recession. The British pound fell to a record low against the euro after a survey of UK estate agents and surveyors forecast home prices will slide in 2009, extending this year's declines.

"The oil price is helping to drive the dollar lower," said Elisabeth Andreew, chief currency strategist in Copenhagen at Nordea AB, Scandinavia's biggest bank. "What's happening in the Middle East is definitely having an impact."