CURRENCY : Demand in Europe Pushes Dollar Higher

NEW YORK — The dollar rose against major currencies Thursday, led by strong demand in Europe and boosted by word from Federal Reserve Board Chairman Alan Greenspan that a stronger dollar would not help the U.S. trade deficit.

Gold prices were mixed. Republic National Bank of New York quoted gold at a bid of $432.75 an ounce as of 4 p.m. EDT, down from $433.45 late Wednesday.

Analysts said the dollar started sluggish, but gained strength in Europe and continued strong throughout the day.

The dollar got a spark from Greenspan’s testimony before a congressional subcommittee that the central bank was likely to tighten rather than loosen credit, which would tend to support the dollar.

Analysts said Greenspan’s reiteration of the Fed’s stance helped strengthen the dollar, due to speculation that interest rates could move higher, increasing the value of dollar-denominated investments.

“Interest rates domestically are going up. That is reflected in the bond market,” said Jack Barbanel, first vice president at Gruntal & Co. “And the dollar is starting to get its strength back again.”

In Tokyo, the dollar fell 0.40 Japanese yen to a closing 132.10 yen. Later, in London, it was quoted at 132.35 yen. In New York, the dollar rose to 132.55 yen from 131.63.

The British pound fell against the dollar. In London, sterling was quoted at $1.7225, compared to $1.7265 on Wednesday, while in New York, the pound fell to $1.7215 from $1.7288.

Other late dollar rates in New York, compared to Wednesday’s rates, included: 1.88615 West German marks, up from 1.84705; 1.5505 Swiss francs, up from 1.53845; 6.2875 French francs, up from 6.2255; 1,377.75 Italian lire, up from 1,364.00, and 1.20785 Canadian dollars, up from 1.2056.

Other late dollar rates in Europe, compared to rates late Wednesday, included: 1.8645 West German marks, up from 1.8495; 1.5505 Swiss francs, up from 1.5375; 6.2885 French francs, up from 6.2375; 2.0920 Dutch guilders, up from 2.0820; 1,370.50 Italian lire, up from 1,365.50, and 1.2086 Canadian dollars, up from 1.2070.

Gold spot prices steadied after swinging in a relatively wide $6 range in Europe, dealers in Zurich, Switzerland, said.

But on the Commodity Exchange in New York, gold for August delivery closed at $432.50 an ounce, down from $433.50 late Wednesday.

In Zurich, spot gold finished at $432.50, unchanged. In London, the metal closed at a bid of $433 ounce, also unchanged.

Earlier, in Hong Kong, gold closed at a bid of $433.78, up from $432.34.

Silver for August delivery finished at $6.707 an ounce on New York’s Comex, down from $6.965 late Wednesday. Earlier, silver was quoted in London at a bid of $6.79, down from $7.

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