NEW YORK: The US dollar fell on Wednesday after data showed the Chinese economy slipped into deflation last month, which raised the chances of China launching additional stimulus measures and nudged investors into risk assets.

Dollar selling by state-owned Chinese banks helped the yuan rally from a one-month low, dealers said. The Chinese central bank’s stronger-than-expected exchange-rate fixing at 7.1588 per dollar before the open signalled its discomfort with the yuan’s recent declines. The greenback was last down 0.2% against the yuan at 7.2246.

The dollar index, which measures the performance of the US currency against six others, slid 0.2% to 102.30, reversing Tuesday’s rise.

The euro rose 0.2% to $1.0978, while sterling dipped to $1.2735. European markets gained after equities tumbled the day before as the Italian government announced a surprise 40% windfall tax on banks.