NEW YORK (AP) — The dollar slid to its lowest level against the euro in nearly three months Thursday amid mounting concerns about the U.S. economy at a time when European indicators are improving.

The euro climbed to trade at $1.3106, its highest level since May 4. In late New York trading, the euro bought $1.3079, up from $1.2980 late Wednesday.

Markets were disappointed with the slight drop in first-time claims for unemployment benefits in the U.S.. Investors were already uneasy about the momentum of the U.S. economic recovery after Wednesday's fairly pessimistic assessment from the Federal Reserve.

Traders largely brushed off earnings stronger reports from Southwest Airlines Co., ExxonMobil Corp., Avon Products Inc. and Sony Corp., all of which topped forecasts.

"Continued softness in U.S. economic releases is taking precedent over a very good earning season and the U.S. dollar remains vulnerable in the near-term and into the holiday season," currency strategists at Brown Brothers Harriman wrote in a note to investors.

Over the last few weeks, the economic newsflow out of the United States has generally underperformed market expectations, leading to concerns that the world's largest economy is not recovering from recession as easily as imagined and that the Fed will not be raising interest rates anytime soon.

That's important for the U.S. currency because rising interest rate expectations were one of the reasons the dollar enjoyed a return to favor in the first few months of the year.

Friday's first estimate of second-quarter U.S. economic growth will be viewed in this context, and any disappointment could weigh further on the dollar. The consensus in the markets is that the U.S. economy grew by an annualized rate of around 2.5 percent in the second quarter. That's still relatively healthy but is not strong enough to promote sustained jobs creation.

"The focus for this week remains on tomorrow's GDP figures as economic data seems to be telling a different story to Q2 earnings data," said Michael Hewson, an analyst at CMC Markets.

At the same time, there's been a turnaround in the economic data out of Europe and easing fears about the government debt crisis that engulfed the single currency zone for most of this year.

Germany, Europe's largest economy, seems to be doing particularly well. Figures Thursday showed the number of unemployed fell on a seasonally adjusted basis for the 13th month running.

In other late trading Thursday, the British pound jumped to $1.5620 from $1.5584 late Wednesday, while the dollar dropped to 86.98 Japanese yen from 87.46 yen.

The dollar also fell to 1.0425 Swiss francs from 1.0580 francs and slipped to 1.0359 Canadian dollars from 1.0382 Canadian dollars.

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Associated Press writer Pan Pylas in London contributed to this report.