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 WASHINGTON: The euro-US dollar exchange rate was steady late Tuesday after the European currency zig-zagged sharply during the day.

Expectations of a European rate rise won out over worries on Portugal's debt and the minutes of the US Federal Reserve's meeting that showed increased attention to rising prices.

After falling to $1.4152 and then shooting to $1.4246, at 2100 GMT the euro was virtually back where it started 24 hours earlier at $1.4221.

The dollar picked up against the weakening yen though, buying 84.84 compared to 84.03 yesterday.

"In the morning the euro was being pressured by concerns about the Portuguese rating portfolio," said Samarjit Shankar of BNY Mellon, referring to Moody's newest downgrade of the struggling eurozone country.

"There is still a lot of negative sentiment the sovereign crisis there," he said, but added that it was offset by new US economic data that showed sluggish growth in the key services sector.

Expectations of a rate increase by the European Central Bank on Thursday were already priced in to the euro-dollar rate, he said.

"But even after that, it is very likely that in the months ahead that the ECB will be a lot more proactive than the Fed" in terms of moving to stifle inflation.

While the main currencies drifted, the big news of the day was a new record in the price of gold in London, at $1,450.65 an ounce, nearly three dollars higher than the March 24 high.

Also grabbing attention was China's fourth rate-hike since late 2010, also seen as an inflation-fighting move.

China's tightly-held currency, the yuan, strengthened slightly to 6.541 to the dollar, from 6.545 yuan.

The yuan, which Washington says is kept deliberately undervalued to help Chinese exports, has drifted down steadily from 6.59 to the dollar at the beginning of the year, and 6.83 a year ago.

The dollar gained to 0.9251 Swiss francs from 0.9227 yesterday, while the pound traded at $1.6291, up from $1.6130.

Copyright AFP (Agence France-Presse), 2011

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