The dollar was little changed on Monday as more banking sector stress added to worries about the U.S. economy, overshadowing a Group of Seven warning on the threat sharp exchange rate moves pose to financial stability.

A surprise first-quarter loss at Wachovia Corp, the fourth-largest U.S. bank, suggested more credit market turmoil ahead, prompting traders to sell dollars, mostly against the euro and sterling.

That helped wipe out dollar gains seen after finance officials from the G7 developed countries on Friday expressed concern about sharp currency fluctuations, the first change to the group's boilerplate foreign exchange language since 2004.

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The dollar had rallied briefly overnight on the view that G7 countries may start buying the dollar to slow its decline.

By Monday in New York, though, investors were betting the G7 would not back up its words with action, especially with the Federal Reserve likely to cut interest rates further to support a U.S. economy many fear may already be in recession.

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