Dollar rises against euro on mixed eurozone data

LONDON (AFP) - The dollar gained on the euro Tuesday as investors shunned the European single currency following the release of mixed eurozone economic data and a disappointing report on US consumer confidence.

The euro in late-day trade was at 1.4552 dollars against 1.4612 late Monday in New York.

The dollar meanwhile crept up to 90.22 yen from 89.58 on Monday.

The euro was penalised Tuesday by reports of a fall in German import prices in August compared with the same month last year, a decline that reflected weaker oil prices.

The euro was also unable to take advantage of eurozone business and consumer confidence indices that strengthened in September for the sixth straight month but at a slower pace.

The European Commission's economic sentiment indicator for the 16 nations using the euro rose to 82.8 points in September from a revised 80.8 in August, continuing a climb away from a record low 64.6 points in March.

But the reading remained below long-term averages and was the smallest gain recorded over the past six months.

Meanwhile the commission's separate business climate indicator also improved in September in the eurozone, although not as clearly as the previous month.

Investors also appeared to have reacted negatively to news that US consumer confidence fell slightly in September as worries about a tight job market overshadowed improving economic conditions.

The Conference Board's consumer confidence index, which had improved in August, dipped in September to 53.1 from 54.5 in August.

The figure was weaker than the 57.0 expected on Wall Street and suggested consumers may be cautious in resuming spending, which is key to an economic recovery.

Renewed questions about the health of the US recovery encouraged investors to seek the safer haven of the dollar.

The yen retreated from an eight-month high point against the dollar after Tokyo fired a warning shot to traders over the Japanese currency's surge, dealers said.

The dollar rebounded after Japan's Finance Minister Hirohisa Fujii said the yen's recent rise was "a bit too rapid" and Tokyo did not rule out stepping into the market to sell the currency "in an abnormal situation."

Although intervention by the Japanese authorities still appears unlikely, traders used Fujii's remarks as a cue to take some profits, said Yuji Saito, head of forex at Societe Generale in Tokyo.

Fujii has said on several occasions since taking his post earlier this month that in principle he opposes action to curb the strength of the yen, which hurts Japanese exporters' earnings.

On Monday, he had said the dollar's recent downtrend was "not abnormal" and it would be a "mistake" to artificially weaken the yen to defend exporters. But he later said his remarks had been misinterpreted as support for a strong yen.

Japan has not intervened in the foreign exchange market since March 2004, allowing the yen to find its own level against the dollar.

Fujii "appears to be back-pedalling on some of his recent comments about not intervening in the forex market and allowing the yen to appreciate," Barclays Capital analysts wrote in a note to clients.

"The realities of governing may be starting to set in," they added. "In our view, a strong yen is not good for the Japanese economy, which has structural problems with deflation and an overdependence on exports."

In London on Tuesday, the euro was changing hands at 1.4552 dollars against 1.4612 dollars late on Monday, 131.30 yen (130.93), 0.9126 pounds (0.9202) and 1.5118 Swiss francs (1.5093).

The dollar stood at 90.22 yen (89.58) and 1.0388 Swiss francs (1.0327).

The pound was at 1.5948 dollars (1.5878).

On the London Bullion Market, the price of gold dipped to 989.50 dollars an ounce at the fixing from 991.75 dollars an ounce late on Monday.