March 3 (Bloomberg) -- The euro held near a 10-day low against the dollar in Europe on speculation European Central Bank President Jean-Claude Trichet will signal the economy is not growing enough to raise borrowing costs from a six-decade low.

Trichet will probably present the bank's new economic forecasts in Frankfurt, after Market News International yesterday said the ECB cut its 2005 growth prediction for the region. The central bank today will maintain its benchmark interest rate at 2 percent as the economy stagnates, according to all 34 economists surveyed by Bloomberg News.

``The euro looks vulnerable,'' said Minoru Shioiri, senior manager of the treasury and foreign-exchange division in Tokyo at Mitsubishi Securities Co., a unit of Japan's second-biggest lender. ``I see little chance that Trichet will show a bullish outlook for the euro-zone economy.''

Against the dollar, the euro traded at $1.3127 at 7:03 a.m. in London from $1.3142 late yesterday in New York, according to EBS, an electronic currency dealing system. The European common currency yesterday dropped to $1.3088, its weakest since Feb. 22.

The ECB cut its 2005 economic growth forecast for the euro region to around 1.6 percent from 1.9 percent and its inflation projection to about 1.9 percent from 2 percent, Market News said yesterday, citing unidentified people at the bank. The economy grew 2 percent last year.

The ECB will announce its rate decision in a conference call at 1:45 p.m. in Frankfurt. Trichet will speak at a press conference 45 minutes later.

`Renewed Optimism'

Any gain in the dollar against the yen may be limited after a government report showed overseas investors were net buyers of Japanese shares for a 19th week in the seven days ended Feb. 25.

The Nikkei 225 Stock Average rose to an eight-month high, extending its longest winning streak this year on signs the world's second-largest economy will pull out of last year's recession.

Household spending rose by the most in nine months and unemployment held at a six-year low, reports on March 1 showed.

``Overseas investors' appetite for Japanese shares will put pressure on the yen to rise,'' said Takashi Toyahara, a currency trader in Tokyo at Nomura Securities Co., Japan's biggest broker. Reports have trigged ``renewed optimism on the Japanese economy.'' The yen may gain to 102 per dollar in a month, he said.

`Good Shape'

Demand for the dollar may emerge on expectations a government report will show U.S. jobless claims fell close to a four-year low.

The U.S. currency yesterday rose for a third day against the euro as Federal Reserve Chairman Alan Greenspan said the economy is expanding at a ``reasonably good pace.'' The dollar may extend its advance this year on speculation the U.S. is creating more jobs to spur growth, prompting the Fed to add to its six interest- rate increases since June.

``We're looking for further improvement in the U.S. labor market,'' said Tetsu Aikawa, a currency sales manager in Tokyo at UFJ Bank Ltd., a unit of Japan's fourth-largest lender. ``The U.S. economy will be in good shape, and interest rates are going to keep on rising. The dollar will be supported.''

The dollar was at 104.86 yen from 104.74 and may gain to 105.10 yen and $1.3080 per euro today, Aikawa said.

The number of Americans filing first-time claims for unemployment insurance probably fell to 310,000 from 312,000, according to the median of 38 estimates in a Bloomberg News survey of economists. The Labor Department is scheduled to release the figure at 8:30 a.m. in Washington. Claims fell to 303,000 during the week ended Feb. 12, the lowest in more than four years.

`Creating Jobs'

The dollar is up 3.2 percent against the euro and 2.2 percent versus the yen this year, after falling for three years to Dec. 31.

``The economy is now developing its own momentum,'' Greenspan told the House Budget Committee in Washington.

U.S. employers probably added 225,000 workers to payrolls in February, the most since October, according to the median forecast of 68 economists surveyed by the Bloomberg News before the release of the data tomorrow.

``We're finally creating jobs,'' former Fed Bank of Dallas President Robert McTeer said in an interview with Bloomberg News yesterday.

To contact the reporter on this story: Taizo Hirose in Tokyo at Hirose2@bloomberg.net.

Last Updated: March 3, 2005 02:06 EST