LONDON (Reuters) – The dollar hit a one-month high against a basket of currencies on Monday while the yen also gained broadly as sharp falls in equities prompted investors to seek the perceived safety of the U.S. and Japanese currencies.

European equities were down some 2.0 percent .FTEU3, led by bank shares and commodities as crude and metal prices sank.

Results from Bank of America (BAC.N) that beat market estimates failed to stem a fall in share prices. The bank said first quarter profits more than doubled, and earnings per share were at 44 cents, compared with estimates of around 4 cents, despite a surge in credit losses.

Better-than-expected earnings from the likes of JP Morgan (JPM.N) and Citigroup (C.N) last week helped assuage concerns over U.S. banking sector health and raised views the U.S. economy may escape recession faster than others.

“The greenback appears to be capitalizing on concerns outside of the United States and also those better U.S. earnings announcements,” said Daragh Maher, deputy head of global foreign exchange research at Calyon. “For now, it seems that the dollar can both have its cake and eat it.”

By 1117 GMT (7:17 a.m. EDT), the dollar index was hovering near a one-month high of 86.549 .DXY.

The euro fell to a one-month low of $1.2945 and also hit a three-week low of 127.66 yen.

The Australian dollar tumbled 2.2 percent against its U.S. counterpart, hitting an 11-day low of $0.7051 and fell to a near three-week low against the yen of 69.54 yen. Sterling also fell 1.6 percent to a low of $1.4537, its weakest in nearly 3 weeks.

The dollar fell 0.5 percent against the yen to 98.63 yen.

Traders will keep an eye out on a raft of other major U.S. blue chip earnings reports this week.

ECB UNCERTAINTY

The euro came under selling pressure as investors anticipated the European Central Bank will cut rates next month and on uncertainty over what kind of additional unconventional policy measures they may announce.

ECB President Jean-Claude Trichet signaled on Sunday that the bank was likely to cut interest rates by 25 basis points from their current 1.25 percent on May 7, though he gave no details of plans for further steps to stimulate the economy.

Separately, ECB Executive Board member Lorenzo Bini Smaghi warned against overstating the risks of deflation in an interview with the Financial Times Deutschland on Monday, while ECB Governing Council member Ewald Nowotny was quoted as saying the main refi rate should not fall below one percent.

“There are worries about what the ECB will do, and also that they may have been too hesitant to introduce these measures,” Frankfurt-based Commerzbank currency strategist Antje Praefcke said.

“We are also seeing some dollar strength due to the view that the U.S. may come out of the crisis first,” she added.

Markets are keen to see if the ECB will follow the Federal Reserve, the Bank of England and the Bank of Japan in buying assets to push liquidity into the banking system.

Investors will seek hints from euro zone data, with the German ZEW and Ifo surveys, as well as euro zone purchasing managers’ indices due out later this week.

(Additional reporting by Jessica Mortimer; Editing by Ruth Pitchford)