LONDON, 3 August 2006 — The euro traded for around 1.28 dollars yesterday after hitting a three-week high amid uncertainty about the outlook for US interest rates, traders said.

The US Federal Reserve had been widely expected to maintain interest rates at their current level, but evidence of an uptick in US inflation has increased speculation that the bank might be compelled to raise borrowing costs for the 18th consecutive time next week.

In late European trading yesterday the European single currency stood at 1.2796 dollars, compared with 1.2827 dollars late in New York on Tuesday. The euro had struck 1.2835 dollars in Asian trading, its highest level since July 7. The dollar eased to 114.50 yen from 114.54 yen late on Tuesday.

The euro was changing hands at 1.2796 dollars against 1.2827 on Tuesday, 146.45 yen (146.94), 0.6815 pounds (0.6834) and 1.5734 Swiss francs (1.5723). The dollar stood at 114.50 yen (114.54) and 1.2294 Swiss francs (1.2253).

On the London Bullion Market, the price of an ounce of gold rose to $654.40 per ounce, from $637.25 late on Tuesday.

Meanwhile, European stock markets advanced yesterday with the London FTSE 100 index of leading shares rising 0.87 percent to 5,932.10 points. In Frankfurt, the DAX ended up 1.50 percent at 5,680.82 points and in Paris the CAC 40 closed 1.58 percent higher at 5,026.25.

In New York, the Dow Jones Industrial Average was up 82.52 points, or 0.74 percent, at 11,208.25. The Standard & Poor’s 500 Index was up 10.34 points, or 0.81 percent, at 1,281.26. The NASDAQ Composite Index was up 22.26 points, or 1.08 percent, at 2,084.25.

Asian stocks closed mostly higher yesterday. In Tokyo, The Nikkei-225 index rose 23.38 points to 15,464.29. In Seoul, the KOSPI index closed up 7.75 points at the day’s high of 1,295.11. In Hong Kong, the Hang Seng index closed up 121.38 points at 17,032.75.

In Sydney, the S and P ASX 200 lost 49.8 points to 4,931.5. In Manila, the composite index ended down 79.96 points at 2,308.37. In Bombay, the 30-share Sensex index closed up 124.53 points at 10,876.19.