Originally created 01/24/04

Dollar rebounds sharply on European Central Bank concerns

NEW YORK - The dollar rebounded sharply against European currencies Friday amid increasing concern that euro-zone officials will take a stand against euro strength.

After extending its three-day losing streak overnight to trade within a cent of 11-year lows against the pound and about a cent away from record lows versus the euro, the dollar started to recover as traders took profits ahead of the weekend.

However, the move gathered steam during the North American session following a news report suggesting that the European Central Bank would consider cutting interest rates if the euro strengthened further.

Further, U.S. Treasury Secretary John Snow reiterated that the U.S. has a "strong dollar" policy, but that exchange rates should reflect economic fundamentals.

Dealers usually ignore well-worn comments on U.S. dollar policy, but in the increasingly nervous climate ahead of the G7 meetings, they gave the dollar an extra boost.

The euro, after trading as high as $1.2774 - within striking distance of the all-time high just below $1.29 - fell nearly 2 cents. Sterling peaked out around $1.8520 overnight, not far from 11-year highs around $1.8575 set earlier this month, before losing nearly 3 cents.

In late New York trading, the euro was quoted at $1.2590, down from $1.2711 late Friday. The dollar was quoted at 106.50 yen, up from 106.08 yen late Friday.

The dollar was quoted at 1.2424 Swiss francs, up from 1.2337, and 1.3129 Canadian dollars, up from 1.2946. The British pound fell to $1.8262 from $1.8443.

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