The dollar climbed to recent highs against several major currencies Monday in choppy domestic dealings after posting gains earlier in Europe despite concerted central bank intervention. Gold prices fell sharply. The dollar reached its highest point since last October against the British pound and West German mark. It reached its highest point since last August against the French franc and Italian lira. Led by West Germany's central Bundesbank, intervention began early in the European trading session. West Germany, which stepped in sporadically to sell dollars throughout last week, was accompanied by the central banks of Switzerland, Italy, the Netherlands, Austria, and Belgium, dealers in Europe said. The Federal Reserve also was believed to have sold dollars, but the U.S. currency continued to resist the downward pressure. ``It's a general feeling that U.S. interest rates are going higher and that there is progress in the trade deficit,'' one London trader said in explaining the dollar's apparent strength in the face of intervention. If the Federal Reserve pushes up interest rates to keep the economy from overheating, dollar securities would become more attractive to foreign investors. Earl Johnson, a vice president at Harris Trust and Savings Bank in Chicago, said the total amount of dollars sold during the interventions was rumored to be in the neighborhood of $1 billion, which he characterized as not particularly excessive considering the number of banks involved. Traders in New York said the market was buffeted throughout the session by mixed messages regarding the level of the U.S. currency. ``There were rumors to the effect that the Bundesbank is not looking for an appreciation of the mark, that the Bank of Japan and the (Fed) are happy with the level of the dollar,'' said John McCarthy, a vice president and trader at Irving Trust Co. But on the bearish side, McCarthy cited former White House economic adviser Martin Feldstein's prediction that the dollar would trade at 100 Japanese yen within three years. ``When you get these arbitrary statements, people get positioned badly and they bail out of the market,'' McCarthy said. ``It was a yo-yo day where people were caught both ways.'' Traders said they expected some skittishness in the market ahead of the government's release on Friday of the merchandise trade report for May. In Tokyo, where trading ends before Europe's business day begins, the dollar rose 1.36 yen to a closing 133.33 yen. Later, in London, it was quoted at the lower rate of 132.96 yen. In New York the dollar closed at 133.07 yen, down from 133.29 yen on Friday. The dollar appreciated against the British pound. In London, it cost $1.6900 to buy one pound, cheaper than Friday's $1.7015. In New York, one pound fetched $1.6925, less expensive than $1.6996 on Friday. Other late dollar rates in New York, compared with late Friday: 1.8423 West German marks, up from 1.8415; 1.5305 Swiss francs, down from 1.5325; 6.2065 French francs, up from 6.1945; 1,367.25 Italian lire, up from 1,364.50; and 1.2072 Canaidan dollars, down from 1.2091. Other late dollar rates in Europe, compared with late Friday: 1.8460 West German marks, up from 1.8378; 1.5350 Swiss francs, up from 1.5295; 6.2080 French francs, up from 6.1820; 2.0750 Dutch guilders, up from 2.0605; 1,364.50 Italian lire, up from 1,355.50; and 1.2082 Canadian dollars, down from 1.2095. Gold prices fell in Europe after New York traders began selling platinum during the European afternoon. Dealers in Zurich said the downward slide appeared limited, and predicted that new buying would emerge. On New York's Commodity Exchange, gold closed at $434.60 a troy ounce, down from $439.10 on Friday. Republic National Bank of New York said gold was bid at $434.50 a troy ounce as of 4 p.m. EDT, down from $439 late Friday. In London, gold finished at a bid price of $435.10 a troy ounce, down from late Friday's $438.50, while in Zurich, the bid price was $435.50, down from $439.50 Friday. Earlier in Hong Kong, gold rose 96 cents to close at a bid $442.04. Silver on New York's Comex finished at $6.937 a troy ounce, down from $7 on Friday. In London the metal was quoted at a late bid price of $6.94 a troy ounce, down from Friday's $7.01.
