LONDON, 14 July 2004 — The dollar bounced back off four-month lows against the euro yesterday after better-than-expected US trade data for May encouraged hopes that the US external deficit may have peaked.

The single European currency in late trade was at 1.2310 dollars after 1.2406 late in New York on Monday. Against the yen the dollar was trading at 109.34, up from 108.16 on Monday.

Sterling was firm against the euro after British inflation in June rose to its highest level since March 2003, cementing expectations the Bank of England will raise the cost of borrowing another quarter point in August to 4.75 percent.

Meanwhile, European stock markets closed little changed yesterday following a lackluster opening on Wall Street.

In London the FTSE 100 index eased 0.05 percent to close at 4,357.7 points, in Paris the CAC 40 nudged up 0.12 percent to 3,656.18 points while in Frankfurt the DAX added 0.27 percent to finish at 3,903.88 points.

The DJ Euro Stoxx 50 index of leading euro zone shares ended the day up 0.11 percent at 2,763.2 points.

Elsewhere in Europe, Madrid’s IBEX-35 index rose 0.39 percent to 8,085, Amsterdam’s AEX nudged up 0.08 percent to 333.8, Brussels’ Bel-20 added 0.89 percent to 2,469.11, Milan’s Mib 30 edged up 0.08 percent but the SMI index of Swiss shares dipped 0.03 percent to 5,531.3.

US stocks were little changed yesterday. The Dow Jones Industrial Average was up 4.3 points, or 0.04 percent, at 10,242.52. The broader Standard & Poor’s 500 Index edged down 0.37 point, or 0.03 percent, to 1,113.98. The technology-laced NASDAQ Composite Index lost 1.74 points, or 0.09 percent, to 1,935.18.

Asian stock markets were mixed yesterday. The Tokyo Stock Exchange’s benchmark Nikkei-225 index gained 26.34 points to 11,608.62.

The broader TOPIX index of all first section shares rose 4.79 points or 0.41 percent to 1,166.47.

In Hong Kong, the Hang Seng Index shed 112.68 points to end the day at 12,078.33.

In Singapore, the Straits Times Index finished 7.26 points higher at 1,878.15, while the broader All Singapore Equities index jumped 1.21 points to 497.69.