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On the other hand, the single currency gave back its Asian session gains versus the franc and the yen. The euro thus fell from 4-day highs against its Swiss and Japanese counterparts.

German economic sentiment dropped 8.7 points to minus 40.7 in April, a monthly survey by the Center for European Economic Research, or ZEW, indicated today. Economists were looking for a reading of minus 30. The indicator stayed well below its historical average of 30 points.

In addition, Italian annual inflation remained stable at 3.3% in March. On a monthly basis, the Consumer Price Index, or CPI, rose 0.5%, at the same pace registered in the prior month. Both figures matched economists` expectations.

Meanwhile, French annual inflation accelerated to 3.2% in March, the statistical office INSEE indicated Tuesday. Economists had expected an increase of just 3%. On a monthly basis, consumer prices were up 0.8%, higher than the 0.6% expected by analysts.

Against the British pound, the single currency rose to a fresh record high of 0.8067 at about 4.30 am ET, compared to 0.8004 hit late New York Monday. Currently, the pair is trading at 0.8045.

UK`s annual house price inflation slowed to 6.7% in February from 8% in January, the Department of Communities and Local Government, or DCLG, reported today. Economists had expected the rate to ease to 7.4%.

The Office for National Statistics revealed today that the UK annual inflation stood at 2.5% in March, same as in February. Economists had expected inflation to rise to 2.6%. Annual inflation continued to stay above the central bank`s target of 2%.

The Royal Institution of Chartered Surveyors (RICS) that the number of chartered surveyors reporting house price declines in March hit its highest level since the survey began in 1978. RICS said 78.5 percent more of its members reported price declines rather than increases for the three months to March. It was the eighth consecutive decrease. Most economists were predicting a less-severe decline.

The European currency showed strength against the US dollar in early deals today. At about 4.45 am Eastern Time, the euro-dollar pair hit a high of 1.5876 compared to Monday`s North American session close of 1.5833. Currently, the pair is trading near 1.5834.

The European Central Bank President Jean-Claude Trichet said yesterday that the policy makers must remain alert to ongoing developments in the global credit crisis. “It is not a time for complacency in any respect, Trichet said in a speech Monday at an economic forum at the New York University Law School.

Trichet emphasized the need for global coordinated action, welcoming recommendations from the Group of Seven nations over the weekend that called for greater transparency and more pro-active regulatory oversight. He noted that despite increasing evidence that the European economy was slowing, inflation remains a growing threat.

The euro advanced to a 4-day high of 1.5847 versus the Swiss franc dollar before reversing direction by about 10.15 pm ET. The pair that closed Monday`s deals at 1.5814 is now worth 1.5812.

Against the Japanese yen, the euro gained in Asian session but pared the gains in early European deals. At about 5.00 am Eastern Time, the euro-yen pair reached 159.72, falling from a 4-day high of 160.54. The pair that closed yesterday`s deals at 160.07 is now quoted at 159.88.

The effects of the subprime crisis have been felt around the world, but its impact has been smaller in Japan than in other countries, Japanese Finance Minister Fukushiro Nukaga told reporters in a regularly scheduled briefing following Tuesday`s cabinet meeting. He did concede that oil and other downside economic factors continue to pose risks for Japan.

Meanwhile, the Bank of Japan Governor Masaaki Shirakawa said that the central bank`s top priority is to prevent financial market confusion as well as to ensure stability.