NEW YORK ? The dollar weakened slightly against the euro Friday after the release of European bank stress test results, in which seven banks failed, was met by skepticism in the markets.
The euro was trading at $1.2906 around 2100 GMT in New York, up from $1.2886 late on Thursday.
Against the Japanese currency, the dollar strengthened to 87.36 yen from 86.92 yen.
The euro initially slipped against the dollar after the publication, beginning at 1600 GMT, of the results of the stress tests on 91 European banks.
The currency of the 16-nation eurozone made a slight comeback in late trades.
"The initial reaction has been mixed," said Vassili Serebriakov, an analyst at Wells Fargo Bank. "We'll have to wait and see for the market to digest the tests a little bit more."
According to the analyst, "a good deal of this bounce-back had less to do with the stress tests and more to do with the way the equity market in the US finished strongly," which encouraged buyers to leave the perceived safe haven of the dollar.
The Committee of European Banking Supervisors (CEBS) announced that seven of the 91 European Union institutions, representing 65 percent of the EU banking sector, had failed the tests designed to assess the capacity to withstand economic or financial crises.
Governments are already working with the seven weak banks ? five in Spain and one each in Germany and Greece ? to help them shore up their finances, the committee said.
Failing the capital strength tests were German state-owned lender Hypo Real Estate, Greece's ATEBank and five regional savings banks in Spain.
The CEBS estimates that the seven banks need to raise a total of 3.5 billion euros ($4.52 billion) to meet minimum capital requirements.
By comparison, the United States tested 19 of its banks in the first half of 2009 and found that 10 of them needed a total of 75 billion dollars in additional funds.
Samarjit Shankar at Bank of New York Mellon said that investors appeared disappointed that the tests were made on the bonds the banks trade rather than those they hold to maturity.
"The euro could have taken a much bigger hit but it held pretty well," Shakar said.
"Now that the stress-tests results are behind us, the focus will be back on what the fundamentals are telling us," he added, referring to recent US economic indicators suggesting the recovery is stalling.
In late New York trading, the pound jumped to $1.5411 from $1.5252 on Thursday, benefiting from better-than-expected data on British economic growth.
Britain's economy expanded by 1.1 percent in the second quarter, the strongest pace since 2006 as the recovery strengthened, official data showed.
The dollar, meanwhile, rose to 1.0548 Swiss francs in late trade from 1.0430 Thursday.
