Dow Jones – The dollar added to earlier gains against major counterparts on Tuesday, as a slide in stocks on Wall Street led investors to seek the shelter of low- yielding currencies.

U.S. stocks fell sharply, shrugging off news of a marked improvement in manufacturing in August. Jitters about financial shares, many of which such as AIG (AIG) rallied in August, helped send the S&P 500 index (SPX) off by 1.8% and the Dow Jones Industrial Average (DJI) off by more than 160 points.

Earlier, stocks posted some short-lived gains and the dollar lost some steam after the Institute for Supply Management said its manufacturing index rose to 52.9% in August from 48.9% in July. This is the first time the index has been above the breakeven point since January 2008. The consensus forecast of estimates collected by MarketWatch was for the index to rise to 50.5%.

Separately, the National Association of Realtors said that pending sales of existing homes rose in July for the sixth straight month.

But shares on Wall Street only showed muted enthusiasm to the data and quickly lost ground, lifting the dollar, which has tended to be used as a safe haven against losses in equities.

The dollar index (DXY), which measures the U.S. unit against a basket of six major currencies, stood at 78.675, up from 78.001 in Asian trade and from 78.242 late Monday.

On Monday, the dollar, which has tended to work as a safe-haven asset, received a lift as a slide in Chinese stocks raised concerns about global demand.

On Tuesday, the U.K. provided some bad news of its own, with a manufacturing gauge unexpectedly sliding back into contraction territory and a fall in consumer lending for the first time in at least 16 years.

The British pound sank against the dollar to fetch $1.616 in recent action, down 0.7% on the day.

In addition, unemployment in the 16-nation euro zone crept to its highest levels in more than a decade.

Against the dollar, the euro fell 0.7% on the day to trade at $1.4232.

In Asian trade, the Australian dollar took center stage, slipping after the Reserve Bank of Australia left its cash rate unchanged and issued an upbeat economic assessment without providing any clues as to when it might tighten its policy.

The Aussie traded at 83.78 U.S. cents, compared with 84.41 U.S. cents shortly before the decision was announced.

The Australian economy has been “stronger than expected,” the RBA governor said in a statement released after the central bank’s monthly policy meeting, citing resilience in consumer spending, exports and business investment.

But the statement said the bank’s “present accommodative setting of monetary policy remains appropriate for the time being,” and the bank left its key cash- rate target at a 49-year low of 3.0%.

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