LONDON, Oct 2, 2008 (AFP) - The euro hit its lowest point in 13 months against the dollar Thursday on growing speculation eurozone interest rates will be cut soon to offset the impact of unprecedented turmoil on global markets.

Dealers said the dollar also continued to attract funds as panicky investors looked to its traditional safehaven status despite the fact that the financial crisis has its roots in the US banking system.

They said the dollar got additional support after the US Senate passed a massive 700-billion-dollar bailout plan for the banks, making it more likely the House of Representatives will reverse Monday's rejection and approve it.

Remarks by European Central Bank head Jean-Claude Trichet after the ECB left borrowing costs unchanged were taken to signal a sharp change of course, with the eurzone guardian looking ready to cut interest rates fairly soon, they said.

'We have examined two options,' Trichet told a press conference in Frankfurt after the bank left its main lending rate unchanged at 4.25 percent.

'One, letting interest rates (be) unchanged, another one decreasing interest rates.

'Our unanimous conclusion was that we were right in maintaining interest rates as they are but we examined the two options,' Trichet said, stressing repeatedly 'the extraordinarily high level of uncertainty' on the markets.

'Trichet took a giant step towards a rate cut,' Commerzbank chief economist Joerg Kraemer commented.

In late European trade, the euro was at 1.3848 dollars, coming off 13-month lows of 1.3748 dollars earlier but still down sharply from 1.4009 dollars late Wednesday in New York.

The euro hit a record high of 1.6038 dollars on July 15, 2008.

The dollar slipped to 105.34 yen from 105.73 yen.

Christine Li at Economy.com said that the troubles at European banks had also boosted demand for dollars.

'European financial institutions that have been overexposed to the financial crisis have scaled back on their lending and are repaying their dollar-denominated loans,' she said.

Citigroup analysts wrote that Trichet's comments made a November eurozone rate cut likely.

'We now expect a rate cut in November and do not rule out that the ECB will participate in a coordinated action with other central banks before the next ... meeting.'

In late London trade on Thursday, the euro changed hands at 1.3848 dollars against 1.4009 late Wednesday, 145.58 yen (148.11), 0.7851 pounds (0.7916) and 1.5702 Swiss francs (1.5771).

The dollar stood at 105.38 yen (105.73) and 1.1368 Swiss francs (1.1257).

The pound was at 1.7592 dollars (1.7693).

On the London Bullion Market, the price of gold fell to 852 dollars an ounce from 880 dollars late Wednesday.