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. Last Updated: 07/27/2016

Euro Gains as Strong Dollar Urged

NEW YORK -- The euro surged to a 10-week high against the dollar Monday, continuing a rally set off last week amid signs of an economic recovery in Europe.

However, the euro dropped again sharply Tuesday after Bundesbank president-designate Ernst Welteke said he did not want to see it too strong, but European shares, spooked Monday by its strength, staged a modest rally.

The single currency, which had been trading close to $1.07, lost almost a cent when Welteke was quoted by a German newspaper as saying a strong euro would hurt exports. It later recovered to just above $1.066.

The dollar rose slightly against the Japanese yen, boosted by comments from U.S. Treasury Secretary Lawrence Summers supporting a strong U.S. currency.

In late New York trading, the euro was quoted at $1.0654, up from $1.0503 late Friday. It rose as high as $1.0724 in intraday trading.

The dollar also was quoted at 116.61 Japanese yen, up from 116.55.

Eleven European countries launched the euro with great fanfare Jan. 4, but the currency has mostly struggled ever since. Last week, it slid to an all-time low of $1.0108.

In the last week, however, the euro has staged somewhat of a recovery, fueled by signs of renewed economic growth in Europe.

Monday's climb was helped by comments from Welteke, who said there had been "good economic reasons'' for the euro's fall in recent months, but now "signs of an economic pickup in Europe are visible.''

Also boosting the euro was a 0.5 percent rise in German consumer prices in June. That sparked speculation that the European Central Bank may soon boost interest rates to ward off inflationary pressures. Higher interest rates would make euro-based investments more attractive to investors.

Against the yen, the dollar rose after Summers reiterated his support of a strong U.S. currency.

"As I have said many, many times, a strong dollar is very much in the interest of the U.S.,'' he said. "That has been our policy, it will continue to be our policy. It is a policy that has served the U.S. well in promoting confidence, in reducing inflation, in reducing capital costs for American firms, in promoting capacity-creating investment."