The dollar sank to a 15-year low against major currencies on Thursday while the euro rose above $1.40 for the first time as the impact of the U.S. Federal Reserve's interest rate cut continued to sweep across markets.

European shares opened lower after Wednesday's robust gains but Asian shares hit a record high on the back of the Fed's 50 basis point cut on Tuesday.

The cut was designed to bolster confidence and provide liquidity in the face of serious credit strains on the financial system. It has driven equities higher, but one victim is the dollar, which is now likely to give investors less return.

The euro hit $1.4064, according to Reuters data, the highest since the launch of the common European currency in 1999. The move coincided with the dollar's index against six major currencies tumbling to a new 15-year low.

The dollar is under pressure across the board, said Kamal Sharma, currency strategist at Bank of America.

Investors expect more Fed cuts in the next few months while comments from the European Central Bank suggests it could resume raising rates once calm return to financial markets.

The Fed's move, meanwhile, continued to lift sentiment on a number of markets.

Emerging market stocks as measured by MSCI were up 0.6 percent and the yield spread between emerging market debt and U.S. Treasuries was below 200 basis points, indicating a decline in risk aversion.

Asia stocks were at a high. MSCI's measure of Asia Pacific stock excluding Japan rose more than 1 percent to a record high, recouping all its losses in July and August and taking year-to-date gains to more than 27 percent.

EUROPE RETREATS

Europe was an exception, with the FTSEurofirst 300 index of top European shares down 0.5 percent. It gained 2.6 percent on Wednesday.

Deutsche Bank fell after it said quarterly earnings would be hit by a credit squeeze.

Britain's Northern Rock, a casualty of the credit crunch, tumbled 14 percent on fresh worries over deposits after the government said its proposed guarantee for depositors would cover all Northern Rock accounts existing at midnight on September 19 or reopened, but not new accounts.

Euro zone government bonds were little changed after a brief rally when the euro hit its high petered out. The interest rate-sensitive two-year Schatz yield was at 4.06 percent and the 10-year Bund yield was at 4.277 percent.

Bunds posted losses on Wednesday when investors ploughed into equities following easier credit announced by the Federal Reserve.

Japan Bank of america