The euro bounced back from a week-long battering yesterday, rising above $0.84 after fresh data showed growth in the powerhouse US economy was slowing.

The euro quickly gained more than a cent to peak at $0.8433 after the release of US gross domestic product figures, which showed the economy grew more slowly than expected in the third quarter.

It eased back slightly to $0.8412 at the close of trade but was still far above $0.8320, where it had been trading immediately before the US news and Thursday's $0.8278 close.

It stood at 57.98p sterling, against 57.79p a day earlier.

ABN Amro's chief economist in Dublin, Dr Dan McLoughlin, said yesterday's rise in the euro was probably due to the US figures. But he said the single currency ended the week a half-cent stronger than its close against the dollar last Friday.

A growing belief that central banks would not defend the currency with another bout of intervention removed a last crutch of support and the euro plummeted to a historic low of $0.8230 on Thursday.

But yesterday, traders were anxious to cover short positions, particularly after comments from the European Central Bank's chief economist, Prof Otmar Issing, in a newspaper interview that hinted gently at the possibility of intervention.

Thereafter the US data and a big order from a US investment bank helped drive the euro higher, market watchers said.

"The headline US GDP figure was weaker than expected, and that gave the euro a bit of a boost," said Standard Chartered treasury economist Mr Julian Jessop. "It is suggesting that US interest rates might now be falling and the growth differential might move in favour of Europe.

"There was also a general nervousness. People have made money going short [selling] the euro, and they were closing positions ahead of the weekend," Mr Jessop added.

But looking ahead, analysts see no reason next week for the euro to reverse what has effectively been a 22-month descent.

The euro's decline has been a tale of two economies: the surging US dynamo, which has boosted the dollar against all foreign currencies, and the sluggish 11-nation eurozone model, which analysts said badly needed structural reform.

The result has been a flood of investment from Europe to the US.

The US data on Friday showed its economy might be slowing up, but is still capable of a benign landing which would leave the dollar more or less unharmed, analysts say. For the euro to profit, a much bleaker US economic story will have to emerge.