LONDON, Oct 10: The euro gained on the dollar on Wednesday as traders continued to react to minutes from the latest US Federal Reserve meeting that were seen as pointing to further interest rate cuts by the bank.

In late European trading the euro was changing hands for $1.4154, up from $1.4104 late on Tuesday in New York, after earlier Wednesday reaching a week high of $1.4172.

The dollar dropped fractionally to 117.16 yen from 117.18 late on Tuesday.

The market continued to digest mixed messages from the US and eurozone, after signs that the US Federal Reserve may be open to further cuts to US interest rates, dealers said.

On Wall Street, US share prices leapt to record highs on Tuesday as minutes from the last US central bank meeting sparked renewed speculation about the possibility of another US rate cut, dealers said.

The minutes suggested policymakers were worried about a spillover from the housing and credit woes to the broader economy when they voted to cut rates by half a percentage point.

“The Fed said that the US economy was likely to grow below its potential for a while and that inflation had moderated,” noted National Australia Bank’s head of currency strategy, John Kyriakopoulos.

“This suggests that the Fed may need to cut interest rates further and the continued pricing of a 25 basis points cut by early 2008 weighed on the US dollar” on Wednesday, he added.

As the Federal Bank mulls a new rate cut, interest rates are seen by the market as likely to be increased or maintained at current levels in the 13-nation eurozone, increasing the potential for appreciation of the EU’s single currency.

The Bank of Japan was also in focus as its monetary policymakers began a two-day meeting.

But the central bank, which has vowed to raise interest rates gradually, is expected to stand pat again on Thursday amid lingering concern over the health of the US housing sector and its impact on the global economy.

The market is “convinced there will be no move,” said Societe Generale’s Yumoto.

The Singapore dollar meanwhile was trading at 10-year highs against the greenback after the Monetary Authority of Singapore signalled a slight tightening of its policy, dealers said.

In Europe, the pound was firmer following relatively hawkish comments from Bank of England governor Mervyn King, which late on Tuesday dampened prospects for a cut in British interest rates any time soon.—AFP