By Stanley White and Ron Harui

Dec. 27 (Bloomberg) -- The dollar is poised to end a two- year slide against the euro in 2008 as government-backed funds in Asia and the Middle East purchase U.S. assets, currency strategists say.

The currency will gain 4.4 percent to $1.40 per euro by the end of the third quarter, according to the median forecast of 43 strategists surveyed by Bloomberg News. The dollar is down 9.8 percent this year to $1.4638 per euro, after weakening more than 10 percent in 2006.

Merrill Lynch & Co., Morgan Stanley, Citigroup Inc. and Bear Stearns Cos., based in New York, sold $20 billion in stakes to bolster capital eroded by credit-market losses. International purchases of U.S. financial assets totaled $114 billion in October, the Treasury Department said Dec. 17, the fastest pace in five months.

``Sovereign wealth funds are getting cheap deals by buying some of these bombed-out assets,'' said Gerry Celaya, chief strategist at Aberdeen, Scotland-based research company Redtower Ltd., whose $1.23 per euro forecast is the most bullish. ``The U.S. economy is resilient and good at clearing out all the dead wood and bouncing back, and the dollar will follow...''

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