NEW YORK, Aug 16: The dollar surged to a six-month high against the euro Friday as traders fretted over eurozone economic momentum while some US indicators revealed better-than-expected economic activity.

The euro was quoted at $1.4685 around 2100 GMT, down sharply from $1.4885 late Thursday. The euro had earlier slumped to $1.4663, marking its lowest point against the US currency since February 20.

Against the Japanese currency, the dollar was changing hands at 110.48 yen, compared with 109.57 a day earlier. The dollar had earlier struck 110.66 yen, its highest level since January.

The British pound meanwhile hit a two-year low point against the dollar as dealers predicted likely future interest rate cuts from the Bank of England to combat flagging economic growth.

The dollar has been buoyed by growing speculation that the European Central Bank could begin cutting interest rates next year to boost the eurozone economy, which shrank by 0.2 percent in the second quarter.

Fears mounted this week over economic growth in Germany, Europe’s largest economy, Britain, France and Italy.

The greenback also soared against the euro Friday after a pair of US industrial production indicators raised hopes that the troubled sector was showing signs of recovery, dealers said.

Industrial production shows broad-based improvement in July,” said Barclays Capital analyst Julia Coronado.

US industrial production rose by 0.2 per cent in July, according to the US Federal Reserve, as the embattled sector continues to exhibit signs of recovery. Most analysts had expected industrial output to be flat.

The report indicates we are seeing the manufacturing sector shift back into expansion after both domestic and foreign demand picked up in the second quarter, added Coronado.

The Federal Reserve Bank of New York’s monthly Empire State survey of manufacturers in New York state found output increased a surprise 2.8 points in August following a 4.9-point decline in July. Analysts had forecast a drop of 2.8 points.

The industrial sector, like other sectors of the US economy, has been facing stiff headwinds from a prolonged housing slump, tight credit, and rising inflation and unemployment.

In late New York trade, the pound was trading at 1.8651 dollars, down from 1.8677 dollars Thursday.

The British unit had earlier slumped as low as 1.8512 dollars -- the lowest point since July 2006 -- after the Bank of England issued a gloomy economic outlook earlier this week.

The dollar had meanwhile climbed to 1.0961 Swiss francs from 1.0877.—AFP