NEW YORK: The US dollar gained against the euro and other major currencies on Wednesday amid jitters about the growth prospects for the German economy, Europe's largest, traders said.

A sharp fall in German industrial orders boosted speculation that the European Central Bank (ECB) could become keener to cut interest rates in future months despite inflationary pressures.

The single European currency was swapping hands at 1.5408 dollars around 2100 GMT, down from 1.5454 late Tuesday.

The dollar meanwhile gained against the Japanese currency, rising to 109.76 yen from 108.36 a day earlier.

Traders said the dollar also benefited from a dip in oil prices and that wider sentiment also gained support as US stock markets stayed in positive territory.

The decline in German orders sparked fears that the 15-nation eurozone as a whole could be moving toward recession given that Germany is the bloc's powerhouse.

Preliminary figures released by the German economy ministry revealed that factory orders fell by 2.9 percent in June from May when adjusted for price and seasonal effects.

Germany accounts for around a third of eurozone output, and the result was much worse than expected by economists polled by Dow Jones Newswires, who had predicted a moderate rise of about 0.5 percent.

The fall, reported a day before the European Central Bank's board meets to discuss interest rates, was the seventh consecutive monthly decline, an unprecedented trend, analysts said.

"Our view that the eurozone economy would fare relatively well in the global downturn has been undermined by the latest news on Germany and the deterioration in the business surveys," said Jonathan Loynes of Capital Economics.

"It now looks likely that the eurozone will be the first major economy to fall into recession."

There is widespread expectation among analysts that ECB policymakers on Thursday will leave eurozone interest rates unchanged at 4.25 percent despite mounting inflationary pressure.

But the news from Germany suggested to some analysts that in a statement accompanying the rate decision, the ECB could signal a greater willingness to ease monetary policy going forward.

The Bank of England is due to end a two-day meeting on Thursday on rates.

Most economists think the BoE will leave its key rate unchanged at 5.00 percent, but some analysts believe a surprise rate hike could be on the cards.

The pound was quoted at 1.9476 dollars, down from 1.9545 late Tuesday.

In late New York trade, the dollar stood at 1.0602 Swiss francs, up from 1.0541. - AFP/de