LONDON, 9 September 2004 — The dollar fell sharply against the euro here yesterday as US Federal Reserve Chairman Alan Greenspan told Congress that inflation was under control, signaling to investors that US interest rates were not about to rise.

The single European currency in late-day trade was at 1.2163 dollars, against 1.2105 late Tuesday in New York. The dollar meanwhile was trading at 109.11 yen after 109.35 on Tuesday.

“The dovish comments on inflation just took the steam out of the dollar,” said Neil Mackinnon, chief economist at ECU Group. As a result, the market put a question mark on whether the Fed will raise the cost of borrowing another quarter point at its next rate-setting meeting on Sept. 21.

The euro was changing hands at 1.2163 dollars against 1.2105 late on Tuesday in New York, 132.81 yen (132.37), 0.6801 pounds (0.6828) and 1.5355 Swiss francs (1.5340).

The dollar stood at 109.11 yen (109.35) and 1.2620 Swiss francs (1.2673).

Meanwhile, European stock exchanges wilted yesterday.

In London the FTSE 100 index lost 0.15 percent to close at 4,558.4 while in Paris the CAC 40 fell 0.12 percent to 3,677.55. In Frankfurt the DAX ended the session at 3,884.16, down 0.13 percent. The DJ Euro Stoxx 50 index of leading euro zone shares shed 0.1 percent to end the session at 2,748.48.

Elsewhere, share prices declined 0.08 percent to 27,758 in Milan, 0.14 percent to 331.28 in Amsterdam, 0.19 percent to 8,096.4 in Madrid, 0.2 percent to 2,631.70 in Brussels and 0.06 percent to 5,559.8 on the Swiss Market Exchange.

US stocks struggled yesterday. After churning for much of the morning, the Dow Jones Industrial Average dipped 14.02 points (0.14 percent) to 10,328.77 while the NASDAQ composite edged up a fractional 0.96 point (0.05 percent) to 1,859.52 at 1600 GMT.

The Standard and Poor’s 500 broad-market index shed 2.17 points (0.19 percent) to 1,119.13.

In Asian trading, Tokyo’s benchmark Nikkei-225 index closed down 0.17 percent at 11,279.19 points yesterday as investors locked in recent profits made on the back of rising optimism about Japan’s economic outlook, dealers said.

Hong Kong’s key Hang Seng Index ended 0.66 percent lower at 13,049.96 points on profit-taking in major property stocks.

In Sydney, the benchmark S&P/ASX 200 index ended 0.4 points or 0.01 percent lower at 3,589.0.

In Johannesburg, Stocks edged up in relatively quiet trade with an initially weaker rand bringing in some foreign buyers, but some insurers were hit after they issued results. The All-share index closed at 11,183.74 points, up 47.38 or 0.43 percent. The All Gold index closed at 1,873.57 points, up 20.05 or 1.08 percent, while the Industrial index closed at 7,878.95 points, up 10.01 or 0.13 percent.