The euro made a calm and reassuring start on its first full day in the world's currency markets on Monday. But some dealers were surprised by the speed with which it replaced the outgoing currencies of the euro-zone.

"It was a momentous occasion, but not a monumental trading day," said Guy Whittaker, global head of foreign exchange at Citibank in London. "Traders have come back from their New Year break with enthusiasm for the new currency but not for taking risks."

After climbing to $1.19 against the dollar in the Asian session, the euro settled back to trade around $1.18 for the duration of European trading hours. This was still higher than the level below $1.17 at its creation on December 31.

Dealers estimated that the volume of trading in the London market was around half the normal level. "It started very thin this morning but picked up a bit later in the day," said David Bloom, currency economist at HSBC in London.

The lack of liquidity in the London market meant that spreads between the rates at which banks bought and sold foreign exchange were about four times wider than usual. But traders expected spreads to narrow in coming weeks.

Some analysts expressed surprise that separate trading in the D-Mark, which many had expected to continue for some time alongside deals in the euro, almost completely disappeared from the moment the markets opened.

"There have been so few deals in the legacy currencies that it is impossible even to draw a sensible chart of the D-Mark against the dollar over the day," said Tony Norfield at ABNAmro in London.

"The jump to dealing entirely in the euro has been much quicker than the market had expected."

Some rumours circulated in the London market that the European Central Bank (ECB) had intervened to prevent the euro rising too quickly against the dollar during the Asian trading session. But Mr Bloom said any intervention was likely to be limited to smoothing the euro's path by offering liquidity to the market, rather than attempting to target a particular level.

The euro made a similarly flawless if subdued debut in Germany's foreign exchange trading rooms.

"Our systems are up and the trading machines are running quite smoothly," said Alfred Schorno, global head of foreign exchange at Commerzbank, Germany's fourth largest bank, which employs 49 traders in derivatives and spot and forward currency trading.

"Nevertheless a lot of people are trying to get used to the new dollar/euro levels, because they have been quoting the dollar against the mark for the last 20 years," he said.

To guard against slip-ups, Commerzbank instructed its dealers to be extremely precise in the course of a deal. Whereas in earlier times a trader might have called out simply: "I'm selling 10 dollars" - meaning a sale of $10m for D-Marks - he was under orders to specify that he was selling dollars for euros. Trading in the euro began at Commerzbank's skyscraper headquarters in Frankfurt at 6am, when the bank's dealers took over from their colleagues in east Asia.

Mr Schorno estimated that trading volume in the German market was running at about a quarter of its normal level. Only about 700 of Commerzbank's 70,000 corporate customers had requested euro -denominated deals, the bank said.

Andreas Ruger, the bank's vice-president of foreign exchange, said dollar/euro deals represented about two-thirds of all business done. "No one wants to take risks for the moment," he added.

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