Dec. 20 (Bloomberg) -- The euro rose for a sixth week versus the dollar after three European Central Bank officials suggested they aren't concerned the currency's 18 percent rise this year will choke off growth in the 12-nation region.

Traders pushed the euro to a record high against the dollar after ECB President Jean-Claude Trichet said Thursday he favored a ``strong and stable'' currency. Trichet's comments, published in the Wall Street Journal, were among those that eased speculation the central bank would sell the currency to stem its advance.

``The central bank came out and said that what's going on now is fine,'' said Margaret Browne, a foreign-exchange analyst at HSBC Bank SA in New York. ``At the same time, it stressed the fact that it didn't want the market to take the euro up to $1.35 overnight.''

For the week, the euro gained 0.8 percent to $1.2374 from $1.2276 the prior week. Europe's common currency reached a record high four of five days in the week, climbing as high as $1.2438. It rose to 133.39 yen from 132.49 last week.

Browne said the euro will rise to $1.35 by the end of 2004.

The ECB won't sell euros unless the currency rises to $1.35, Market News International reported this week, citing unidentified people inside the bank. Policy makers view a euro rate between $1.05 and $1.20 as the currency's equilibrium range, Market News said, citing one of the bankers.

Driving the euro higher were comments from Ernst Welteke, an ECB council member, who yesterday said in a televised interview with Bloomberg News that the euro's appreciation against the dollar is being ``over-estimated.'' Otmar Issing, the ECB's chief economist, said Wednesday that the euro was ``essentially back where it started'' when it was introduced five years ago.

Trade-Weighted Average

On a trade-weighted basis, the euro is little changed from its introductory level in 1999. The euro's trade-weighted index rose to 104.61 yesterday from 104.30 Thursday. The index traded at 103.64 in January 1999.

Since then, the euro has averaged 99.15 U.S. cents, according to Bloomberg data. Based on the value of the dozen currencies that joined to create the euro, the common currency has averaged $1.1185 in the past 10 years.

``We're not at any pain threshold yet, in terms of the ECB and the value of the euro,'' said Timothy Stewart, the chief currency strategist at Morgan Stanley in New York. The euro may strengthen to $1.30 in the first quarter of 2004, he said.

Yesterday, the dollar rose against the euro in New York after some traders reduced bets the U.S. currency will extend its slide into next year. The extent of the dollar's decline suggested to some traders that the currency was poised for a rebound.

Just as Bad?

``The pace of the dollar's decline makes it hard to say that 2004 will be as bad of a year as this year,'' said Parker King, a senior currency analyst at Putnam Investments in Boston, which manages $245 billion. ``Will next year be another negative year for the dollar? Probably. Will it decline by a similar amount? I don't think so.''

On a 100-point scale, the so-called 14-day relative strength index registered below 30 for six straight trading days, suggesting that the selling may have reached its peak. The index indicates possible turning points in a security, commodity or currency by calculating the degree to which its daily gains outpace its daily losses.

``The momentum of the dollar's fall is unsustainable,'' said Lauren Germain, foreign-exchange strategist at Bank of America in New York. Economic reports this week, including a Philadelphia manufacturing index, are ``solidifying the fact that the economic recovery in the U.S. is healthy.''

Futures Bets

Figures from the Commodity Futures Trading Commission show that the difference in the number of wagers by hedge funds and other large speculators that the euro would rise compared with bets that it would fall -- so-called net longs -- was about 34,800 in the week ended Tuesday, the highest since May 2002. Bets the euro would rise outnumbered wagers that it would fall by eight to one.

The figures are released on Fridays by the Washington-based group and reflect investors' holdings in currency-futures contracts at the Chicago Mercantile Exchange.

``U.S. economic numbers have been showing pretty consistently a broadening of our recovery,'' said Lisa Finstrom, senior currency analyst at Citigroup Global Markets Inc. in New York. ``I think it makes sense to lighten up'' on currencies that have advanced against the dollar this year, she said.

The dollar briefly rose Thursday after the Labor Department said jobless claims fell to 353,000 in the week ended Saturday from a revised 375,000 in the prior week. The number of claims filed last week matches an almost three-year low reached in the last week of October.

Manufacturing

A bigger-than-forecast gain in an index of Philadelphia-area manufacturing index also supported the dollar Thursday, analysts said. The Philadelphia branch of the Federal Reserve said the index rose to 32.1 in November from 25.9 in the prior month. A number greater than zero signals a majority of the manufacturers surveyed reported an improvement in business.

``The U.S. economy is clearly growing more quickly than the euro area -- the problem is that interest rates are still lower in the U.S,'' said Larry Kantor, head of global market strategy at Barclays Capital Inc. in New York, in a televised interview with Bloomberg News.

Declines in the dollar have come this year as higher interest rates available in other major economies lured international investors away from dollar-denominated financial assets. At 1 percent, the Federal Reserve's target for overnight loans is half the ECB's benchmark rate.

Central Banks

As a result, the yield on the benchmark two-year U.S. Treasury note, a 1 7/8 percent coupon maturing in November 2005, yields 73 basis points, or 0.73 percentage point, less than a German note with a similar maturity.

Purchases of U.S. Treasuries by international investors in October would have dropped $7.1 billion had it not been for central banks, the Treasury Department said earlier this week.

Hong Kong has sold HK$27 billion ($3.5 billion) of its own currency since Sept. 23, a record for the year, according to figures provided by the authority to Bloomberg data and information published on the authority's Web site.

In October, Hong Kong increased its net holdings of U.S. Treasuries by $900 million.

The yen weakened against the dollar after Bank of Japan policy makers said an excessive strengthening of the yen could hurt Japan's exports and corporate profits, minutes of the bank's meetings Oct. 31 and Nov. 20-21 show.

`Clear Risk'

Japan, pulling out of 12-year slump, has spent more than 17.8 trillion yen ($165 billion), a record, in an effort to stem the yen's 10 percent rise against the dollar this year to protect exports from companies such as Toyota Motor Corp. and Sharp Corp.

``A clear risk for the yen is the resumption of aggressive intervention,'' by the BOJ, said Monica Fan, a currency strategist at Royal Bank of Canada in London, in a televised interview with Bloomberg News.

Exports and capital spending accounted for all the Japanese economy's 0.3 percent growth last quarter.

The British pound fell versus the dollar as investors scaled back expectations the Bank of England will follow November's rate increase with a further monetary policy tightening in coming months. The pound weakened to $1.7651 yesterday from $1.7738 Thursday.

Last Updated: December 20, 2003 10:25 EST