Readers say: Getting rid of campaign posters a difficult job

TOKYO (AFP) - The dollar held firm at around three-month highs against the yen in Asian trade on Tuesday, supported by easing concerns about the outlook for the US economy, dealers said.

The euro meanwhile slipped back from its record high against the Japanese currency as players pocketed profits after the single currency's recent rise into uncharted territory, they added.

The dollar was at 121.46 yen in Tokyo morning trade after 121.45 yen in New York late Monday.

The euro dipped to 1.3459 dollars from 1.3469 and to 163.45 yen after 163.62 yen.

"Dollar-buying sentiment remains strong after recent indicators supported the view that the US economy is on the right track," said Yosuke Hosokawa, head of Chuo Mitsui Trust Bank's forex group.

But he said trading was subdued and the dollar was unlikely to post sharp gains against the yen in the near-term.

"The dollar is likely to extend its strength, not rapidly but gradually," said Hosokawa.

Dealers said Wall Street's continued record-breaking run has also helped to shore up the US currency.

The blue-chip Dow Jones Industrial Average stock index has rocketed higher this year, breaking a succession of record highs although it closed Monday slightly lower at 13,543.12 points.

Players were awaiting the ZEW and Ifo German business confidence indicators, to be released on Tuesday and Thursday, respectively, for leads on the health of the eurozone's largest economy.

The ZEW expectations index is tipped to improve further in May to 21.0 from 16.5 in April.

In Japan, consumer prices due out on Friday are the main economic event this week with the market expecting a third straight monthly fall.

Even so, many economists expect another quarter-point interest rate hike in the third quarter of 2007 and Bank of Japan governor Toshihiko Fukui said last week rates could go up even if consumer prices keep falling.

The market was also monitoring high level economic talks between the United States and China Tuesday that were expected to be dominated by concerns in Washington over the burgeoning US trade deficit with the Asian giant.