LONDON, Dec 17 (AFP) - The euro gained ground against the dollar late Friday after getting a lift from a better-than-expected improvement in the Ifo business confidence survey in Germany.
In late European trading, the single European currency was at 1.3283 dollars, up from 1.3237 late on Thursday in New York.
The dollar stood at 104.28 yen compared with 104.76 on Thursday.
The euro shed earlier gains against the dollar as investors continued to close out positions and book profits ahead of the year-end.
"Year-end profit-taking and position squaring together with the deterioration in the technical outlook suggests the euro will remain under pressure against the dollar in the near-term," said Hans Redeker, global head of FX strategy at BNP Paribas.
Those factors helped offset the benefits the single currency had garnered earlier in the day.
The euro, which had fallen strongly Thursday against the dollar on a smaller-than-expected third quarter US current account deficit, climbed as high as 1.3317 dollars early Friday on news that a key indicator of German business confidence rose to its highest level in eight months.
The Ifo economic institute said its widely watched index rose by 2.1 points to 96.2 points, while analysts had forecast it would fall 0.2 points to 93.9 points.
The rise caught markets off-guard because the index had fallen to 94.1 points in November, its lowest level in 14 months.
In the run-up to Christmas however, trade will remain thin and volatile and the dollar could consolidate some of its recent gains over the next two weeks before turning lower again in the new year.
"Trading will be quiet as we approach Christmas and we could see some profit taking before dollar weakness resumes in the first quarter of next year," Standard Chartered forex analyst Marios Maratheftis said.
Earlier, the release of in-line US inflation data had little impact, causing the dollar to rally very briefly before quickly falling back down again.
"The 0.2 percent month-on-month increases in both headline and core consumer prices in November would seem to support the Fed's belief that inflation remains 'well contained'," said Paul Ashworth, economist at Capital Economics.
Elsewhere, the pound remained solid against both the dollar and the euro -- which dipped below 0.6850 pounds -- as a week of strong British data has prompted some re-evaluation of future interest rate expectations.
"The sharp sell-off in the UK futures contract today and yesterday has seen interest rate sentiment swing in the UK from a cut to a possible rate rise," said HSBC analyst Clyde Wardle.
The euro was changing hands at 1.3283 dollars against 1.3237 late on Thursday in New York, 138.60 yen (138.71), 0.6853 pounds (0.6850) and 1.5387 Swiss francs (1.5340).
The dollar stood at 104.37 yen (104.76) and 1.1588 Swiss francs (1.1589).
The pound was at 1.9380 dollars (1.9317), 202.32 yen (202.30) and 2.2459 Swiss francs (2.2389).
On the London Bullion Market, the price of an ounce of gold stood at 438.90 dollars against 439.50 late on Thursday.
12/17/2004 17:54 GMT - AFP