NEW YORK, March 17: The US dollar fell sharply on Friday after an inflation snapshot triggered renewed concerns about the US economy, traders said. The single European currency was changing hands at $1.3307 at 2000 GMT compared with 1.3236 late Thursday in New York. The euro at one point climbed to $1.3340, its highest point against the dollar since December 8.

The dollar meanwhile dropped to 116.72 yen compared with 117.48 on Thursday.

The currency market was laden with a number of concerns for the US economy and its currency. Over the past days, weak retail sales, inflation and factory activity gauges have left the greenback little fuel for big moves, said John Kicklighter, a currency analyst at Forex Capital Markets.

Economists said the latest US inflation reading would likely cement a decision next week by the Fed to keep US interest rates on hold at 5.25 per cent. The Fed, which has cited inflation as one of its key concerns, meets Tuesday and Wednesday in Washington to mull US rates.

The Labour Department said earlier Friday that US consumer prices rose 0.4 per cent in February, stronger than the 0.3 per cent rise widely expected by Wall Street.

The core inflation reading, which strips out volatile food and energy costs, rose 0.2 per cent and was in line with forecasts.

The rise in inflation comes amid a wider slowing of the world's largest economy, although a separate economic indicator Friday was more upbeat.

The jump in industrial output across the United States marked the strongest gain since November 2005, but was largely attributed to a ratcheting up of gas and electricity output from the nation's utilities amid cold winter temperatures.

Dollar weakness since the big equity market sell-off began at the end of February has largely been confined to lower-yielding currencies as carry trades have come under pressure, but over the past two days the dollar has come under broader pressure, said Daniel Katzive at UBS.

Investors are worried about an overall US economic slowdown, concerns that have been driven by the difficulties facing sub-prime housing lenders, who lend money to borrowers with patchy credit histories.

In late New York trade, the dollar stood at 1.2071 Swiss francs from 1.2171 Thursday.--AFP