LONDON, 22 October 2005 — The dollar was higher yesterday against the euro but its momentum was checked as traders priced in prospects for higher interest rates in the United States.

The single European currency in late-day trade was at 1.1966 dollars, against 1.2018 late Thursday in New York.

The dollar was meanwhile trading at 115.92 yen after 115.33 on Thursday. “The dollar had strengthened because of yield differentials. Now central bankers around the world, not just in the US, are cranking up the threat of inflation. The differential is now narrower,” said Marios Maratheftis a currency strategist at Standard Chartered in London.

Central bankers as far flung as South Africa and Canada have been talking about rising price pressures. In Europe too, the rhetoric has been decidedly hawkish.

The pound meanwhile nudged higher after British third quarter gross domestic product (GDP) data came in roughly as forecast. Sterling rose after the release dimmed prospects of an interest cut from the Bank of England before the end of 2005, analysts said. On the London Bullion Market, the price of an ounce of gold fell to $462.85 from $464.30 late on Thursday.

Meanwhile, European stock markets fell back yesterday, with the London FTSE losing 0.42 percent 5,142.1 points.

In Frankfurt the DAX 30 fell 0.53 percent to 4,838.40, while in Paris the CAC 40 dropped 0.55 percent to 4,366.52.

US stocks traded mixed yesterday. The Dow Jones Industrial Average slumped 65.07 points (0.63 percent) to 10,216.03, while the tech-heavy NASDAQ rallied 12.06 points (0.58 percent) to 2,080.17 at 1540 GMT.

The broad-market Standard and Poor’s 500 index managed a gain of a fractional 0.85 point (0.07 percent) to 1,178.65.

Asian stocks closed mixed to firmer yesterday in volatile trade. The Tokyo Stock Exchange’s benchmark Nikkei-225 index climbed 9.49 points or 0.07 percent to 13,199.95 on turnover of 2.20 billion shares.

The Bombay Stock Exchange’s 30-share Sensex index rose 133.83 points to close at 8,068.95. Turnover was moderate at 31.08 billion rupees ($688 million), with 1,233 stocks higher and 1,198 lower.