April 26, 2007	Thursday	Rabi-us-Sani 08, 1428

LONDON, April 25: The euro came within striking distance of its record level against the dollar on Wednesday, with analysts predicting a breakthrough of the historic 1.3666-dollar mark in the near future.

After a high of $1.3665 in early trading Wednesday, the European single currency fell back slightly later in the day but was expected to resume its climb against the dollar.

“The dollar corrections are far weaker than we expect and it seems the euro is on the point of breaking its record,” commented analyst Phil Roberts at Barclays Capital.

In late European trade, the euro was trading at $1.3648 -- not far off its record peak of $1.3666 that was hit on December 30, 2004.

The euro has gained 3.5 per cent against the dollar since the start of the year and 15 per cent since January 2006.

The dollar stood at 118.60 yen, compared with 118.55 on Tuesday.

The strength of the euro is because investors are attracted by the likely prospect of higher eurozone interest rates, compared with the increased chances of lower rates in the United States.

The euro was given a fresh boost on Wednesday by a stronger-than-expected business survey in Germany, the eurozone’s biggest economy, which cemented expectations of further rises in European interest rates.

“Germany’s strong Ifo business confidence readings will be latched onto by the ECB to justify higher rates ahead,” said analyst David Brown at Bear Stearns, adding that Germany “seems to be undergoing a white hot change of economic positivism.”

The widely watched business climate index, calculated each month by the Munich-based economic research institute Ifo, rose to 108.6 points in April from 107.7 points in March.

The increase put the index just one-tenth of a point away from the record score of 108.7 points recorded in December.

“Overall, today's number is another piece of the jigsaw adding up to a monetary tightening next month,” said Daragh Maher, senior forex strategist at Calyon.

The dollar was also undercut by weak property data that raised fears about an economic slowdown of the US economy, the world’s biggest.

Government data on Wednesday showed US new home sales rebounded 2.6 per cent in April, but the rise was below most forecasts by private economists.

New home sales reached an annualised pace of 858,000 units, the Commerce Department said, below the average Wall Street forecast for a pace of 890,000.

The level of sales remained 23.5 per cent below last year’s pace, reflecting the slump in what had been a sizzling property market for several years.

—AFP