NEW YORK, Jan 27: The dollar gained ground on Friday in the wake of robust US economic news as durable goods orders remained robust and as new home sales rose by more-than-expected last month.

The upbeat economic news gave the dollar a boost amid hopes the world's largest economy could be picking up steam again, raising the possibility of future interest rate hikes.

At 2200 GMT, the euro remained under the $1.30 mark at $1.2916 late Friday, down from $1.2935 late Thursday.

The dollar was meanwhile changing hands against the Japanese yen at 121.53 yen late Friday, up from 121.15 yen late Thursday in New York.

And the British pound was quoted at $1.9595, down from $1.9645 late Thursday.

Sterling had spiked as high as $1.990 on Tuesday, marking its highest level against the dollar since 1992, as traders speculated on future interest rate spreads.

However, the dollar clawed back ground by week's end following Friday's economic news.

Friday's (economic) numbers offered strong support for the US economy and its representative currency, said John Kicklighter, a currency analyst at Forex Capital Markets.

Orders for US durable goods rose 3.1 per cent in December as transportation equipment orders remained robust, the Commerce Department said earlier Friday.

The gain was weaker than most Wall Street analysts' forecasts that durable goods orders would rise 3.5 per cent in December. Nonetheless, the increase in orders was the strongest since September.Meanwhile, sales of new US homes rose by more-than-expected in December, but over 2006 fell by the biggest margin in 16 years, according to a separate government report.

The Commerce Department said new home sales rose 4.8 per cent in December to an annualized clip of 1.120 million, defying most economists who had expected sales to increase to just 1.050 million homes.

However, the government report also showed that sales of newly built homes slumped 17.3 per cent in 2006 to 1.061 million homes compared with the prior year's sales pace.

Traders said the yen came under pressure from relatively soft Japanese inflation data, which cast further doubt on the likelihood of a rate hike next month from the Bank of Japan.

Figures showed that Japan's December core CPI rate decelerated to 0.1 per cent on an annual basis against expectations of a second consecutive 0.2 per cent.

Today's report from Japan must surely be seen as a further obstacle in the process of monetary normalization, said Neil Mellor, a currency strategist at the Bank of New York.

The dollar stood at 1.2534 Swiss francs, from 1.2481 Thursday.--AFP