NEW YORK: The US dollar weakened on Monday under pressure from a rebound in oil prices, despite better-than-expected earnings from Bank of America that eased some concerns about the US financial sector.

The euro rose to 1.5921 dollars around 2100 GMT from 1.5846 late Friday.

The dollar fell to 106.41 yen from 106.95.

Oil futures prices, which plunged more than 16 dollars a barrel in New York last week, surged higher as a tropical storm barrelled through the Gulf of Mexico, threatening oil installations.

New York's main contract, light sweet crude for August delivery, advanced 2.16 dollars to close at 131.04 dollars.

Oil prices also found support from heightened geopolitical tensions over Iran's nuclear programme, suspected by the United States and other major powers of concealing a drive for atomic weapons.

After international weekend talks failed to make progress, the United States and Britain warned on Monday that Iran faces further sanctions if it does not suspend its nuclear programme. Tehran insists its programme is strictly for energy production.

"The failure to make progress on the Geneva nuclear talks with Iran over the weekend provoked fears of fresh sanctions against the Islamic regime and helped push oil higher, stocks lower and rallied the EURUSD in the process," said Boris Schlossberg, an analyst at Forex Capital Markets.

"Currency traders flocked to the euro on safe-haven concerns," he added.

Bank of America announced a second-quarter profit of 3.41 billion dollars - down 41 percent from a year ago amid fresh write-downs from real estate but well above expectations.

The dollar had firmed on Friday after US banking giant Citigroup, among the hardest hit by the domestic housing crisis, posted a smaller-than-expected quarterly loss.

The news from Citigroup and Bank of America soothed investor jitters about the health of the financial sector in the world's largest economy, which is reeling from the worst housing slump in decades and tight credit.

The euro meanwhile continued to benefit from hardline comments on inflation by European Central Bank chief Jean-Claude Trichet on Friday.

In late New York trade on Monday, the dollar fell to 1.0176 Swiss francs from 1.0223 late Friday.

The pound rose to 2.0032 from 1.9990. - AFP/de