LONDON, 8 January 2004 — The dollar enjoyed some respite yesterday as dealers locked in profits from the euro’s recent rally on the eve of an interest rate decision by the European Central Bank. The single European currency eased to 1.2667 dollars from 1.2723 late on Tuesday in New York. The dollar stood at 106.19 yen, unchanged from Tuesday.

“The market at last shows some sign of pausing for breath,” said Steve Pearson, strategist at the British bank HBOS. The greenback has fallen heavily against a range of other currencies in recent days, allowing the euro to rally to a lifetime peak above 1.28 dollars on Tuesday and sterling to hit an 11-year high.

Stocks eased in the United States yesterday as investors waited for the start of the earnings season and the latest readings on the labor market later this week after lifting the technology-rich NASDAQ to a 2-year high on Tuesday. Investors are growing more confident in a recovery in the economy and corporate profits, but lofty share prices are becoming a concern on Wall Street. Major market gauges raked in double-digit percentage gains in 2003 and got off to a firm start in 2004.

The NASDAQ Composite Index dipped 5 points, or 0.27 percent, to 2,051, after hitting its highest close since Jan. 4, 2002 on Tuesday. The Dow Jones industrial average fell 51 points, or 0.49 percent, at 10,486. The Standard & Poor’s 500 Index lost 5 points, or 0.45 percent, to 1,118.

Asian share prices closed mixed yesterday, with Thailand once again leading the losers on continued heavy profit taking while long stagnant Kuala Lumpur burst into life following a Cabinet reshuffle, dealers said.

Japanese share prices closed 0.52 percent lower as investors took profits on recent gains, citing the threat of a rising yen, dealers said. The Tokyo Stock Exchange’s Nikkei-225 index lost 56.17 points at 10,757.82 while the broader TOPIX of all First Section shares slipped 3.91 points or 0.37 percent to 1,051.59.

Hong Kong share prices closed up 0.93 percent, supported by continued strong fund flows while Chief Executive Tung Chee Hwa’s policy speech had negligible impact on the market, dealers said. The key Hang Seng Index gained 121.36 points to close at 13,157.68 on trade of 26.13 billion Hong Kong dollars ($3.35 billion).