LONDON, April 10: The dollar stalled against major currencies on Thursday despite the stunning success of US forces in Iraq, as the market focused instead on worries about underlying economic woes.

The single European currency edged up fractionally to $1.0772 from 1.0770 late on Wednesday in New York.

The dollar fell back slightly to 119.95 yen from 120.07 on Wednesday.

The inertia came despite the seemingly almost complete collapse of Iraqi leader Saddam Hussein’s regime the day before, leaving US troops in almost total control of Baghdad.

The lack of a rally for the United States currency underlined how dealers had already anticipated a swift end to the war, said Derek Halpenny, an economist at the Bank of Tokyo-Mitsubishi.

The failure of the dollar to derive support from the fact that Baghdad has fallen without any further intensification in fighting has underlined the view that the dollar has fully priced the best-case scenario for the end of the war and Saddam Hussein’s regime, he said.

With this being the case, the market is now switching its attention back to economic fundamentals, which have clearly worsened over the period of time that the war in Iraq has taken the full attention of the financial markets.

The woes affecting the US were underlined again on Wednesday, when an International Monetary Fund report said the world’s biggest economy was mired in a “soft spot” due to the Iraq war as well as weak business and consumer confidence.

In Britain, the markets were awaiting a decision by the Bank of England’s monetary policy committee (MPC) on interest rates later Thursday.

Although most analyd some strong hints that there is scope to cut and the economy is weak enough to justify it, said David Brown, an economist at Bear Stearns.

The euro was changing hands at $1.0772 from 1.0770 late on Wednesday in New York, 129.24 yen (129.31), 0.6889 pounds (0.6888) and 1.4910 Swiss francs (1.4856).

The dollar was being quoted at 119.95 yen (120.07) and 1.3843 Swiss francs (1.3798).

The pound was at $1.5636 (1.5624), 187.54 yen (187.60) and 2.1658 Swiss francs (2.1558).

On the London Bullion Market, the spot price of an ounce of gold rose $3.20 from the previous closing price to $324.55 per ounce. —AFP