NEW YORK: The US dollar climbed against the euro on Thursday after gloomy economic data darkened the economic outlook for the 15-nation eurozone, sparking fears of recession.

The euro fell to 1.5683 dollars around 2100 GMT, from 1.5693 dollars late Wednesday.

The dollar slipped to 107.19 yen from 107.86.

Downbeat surveys on eurozone business activity and German business sentiment weighed on the single European currency, while the dollar benefited from expectations the Federal Reserve would raise interest rates in the near future to curb inflation.

Traders said that after a quarter-point hike in interest rates earlier this month to keep inflation in check, the European Central Bank was now less likely to tighten monetary policy further even though prices were rising at a record pace in the 15-nation eurozone.

"The latest very weak survey data from the eurozone will surely prevent the European Central Bank from raising interest rates further," said Capital Economics analyst Ben May.

"On the face of it, the surveys suggest there is now even a risk of a technical recession in the region."

Eurozone business activity contracted more sharply than expected in July, hitting the lowest level since just after the September 11, 2001, terrorist attacks in the United States, a key survey showed Thursday.

The eurozone's purchasing managers index (PMI), compiled by data and research group Markit, slid to 47.8 points in July from 49.3 in June.

The drop, which indicated that private sector activity in the bloc was at the lowest level since November 2001, was worse than forecasts for a reading of 48.7 points.

A separate survey in Germany, the eurozone's biggest economy, showed that business sentiment plunged to a 34-month low in July amid high oil prices and a strong euro which crimps exports.

The monthly business climate index calculated by Munich-based economic research institute Ifo fell below the psychologically key 100 level to 97.5 points, from 101.3 points in June.

The last time it was below that level was in September 2005. Analysts had forecast a more modest drop in July to 100.2 points.

"For a long time now, the German Ifo survey has presented a much more optimistic picture relative to other survey data - in particular the PMIs - and so this month's release finally represents some significant catch-up to the downside," said Barclays Capital analyst Nick Matthews.

The German data "bodes badly for the region as a whole," said Boris Schlossberg, analyst at Forex Capital Markets.

"Sentiment has turned sharply lower as the German economy has finally succumbed to the triple-punch combination of higher oil prices, higher interest rates and higher exchange rates," Schlossberg said.

In late New York trade, the dollar stood at 1.0364 Swiss francs, down from 1.0378 late Wednesday.

The pound slipped to 1.9865 dollars from 1.9984. - AFP/de