European Central Bank intervenes in money markets to boost value of euro¤

The ECB, which decides monetary policy in the 11 nations using Europe's common currency, last intervened Sept. 16, coordinating with the U.S. Federal Reserve and the Bank of Japan and other central banks to boost the beleaguered currency.

The euro immediately rallied on news of Friday's intervention, skyrocketing to within a hair of 88 cents to the dollar before giving up most of those gains and falling back to hover above 87 cents. It had been languishing around 86.5 cents throughout much of the day. The ECB did not say how many euros it had bought.

The Bank of England, which participated in the September intervention, said it had stayed out of this round but welcomed the move to bolster the euro.

"I welcome the ECB's intervention which I hope contributes to the restoration of more sustainable exchange rate relationships in line with the G-7 communique of 23 September," said the Bank's governor, Sir Eddie George.

In September, when the euro first tumbled below the 85 cent level, the ECB and other allies within the so-called Group of Seven rich, industrialized countries launched a synchronized strike to buy euros and said they would do so again when necessary.

The prospect of intervention has surfaced in recent days as economists and money traders speculated that such a move would give an extra boost to the euro's recent comeback since bottoming out last week at an all-time low below 83 cents.

When the ECB shows itself willing to intervene in currency markets and buy euros, money traders are less willing to sell euros for fear of being caught empty-handed if a big buyer for the currency suddenly emerges.

The euro caught an updraft late last week when the United States reported its economic growth fell to 2.7 percent in the third quarter, less than half the pace of the sizzling 5.6 percent posted the quarter before.

When asked Thursday at a regular ECB meeting whether the euro's recent rise was due to a covert intervention by the ECB, Duisenberg refused direct comment. But he tacitly acknowledged the ECB had stayed out of markets when he said any interventions would be announced after the fact. There was no such announcement Thursday.

But economists warned that central banks sometimes like to intervene when a currency is appreciating to give it an extra boost upward.

The threat of intervention was raised earlier this week by Ernst Welteke, president of Germany's central bank and a member of the ECB's governing board, who said in a magazine interview that the euro's guardians were prepared to intervene again when necessary to boost the euro. U.S. Treasury Secretary Lawrence Summers spurred further speculation when he said Tuesday there was "a role for intervention."

Some economists had speculated an intervention was in the works, but later in the month. Commerzbank's lead euro specialist, Bernhard Pfaff, said earlier in the week that if the ECB intervened again, it would make better sense to do it later this month after seeing whether the appreciation is a real trend.

Intervening then would have also open the door for the U.S. Federal Reserve to join, lending greater credibility and scale to the move. The ECB's trans-Atlantic counterpart is seen as a reluctant partner now for fear of upsetting markets before Tuesday's U.S. presidential election.

(AP)