The dollar surged higher versus the euro and gained modest ground versus the sterling Friday in New York after mounting evidence that the recession gripping Europe is getting worse and may linger longer than previously expected.

Additionally, the dollar received support from speculation that its role as the world's currency will not be formally discussed at the upcoming London economic meeting of the Group of 20. Earlier in the week, China's central urged that a global currency managed by the International Monetary Fund replace the dollar.

The dollar rose sharply versus the euro in very dealing and extended its gains following the release of US economic data revealing the mindset of consumers. The dollar jumped to 1.3250 before leveling off, a big improvement from its overnight level near 1.3600.

US personal spending increased in the first two months of the year, according to a report released by the Commerce Department on Friday, with the two consecutive months of growth following six straight months of declines.

The report showed that personal spending rose 0.2 percent in February, with the increase coming in line with economist estimates. The modest increase followed an upwardly revised 1.0 percent increase in January, which compares to the previously reported 0.6 percent growth.

Meanwhile across the Atlantic, the data painted a much more dour picture of the European economic condition.

Industrial new orders in the Euro area continued to contract in January, logging the steepest fall in about 13 years. The French economy contracted less than previously estimated in the fourth quarter of 2008, while it was confirmed that the UK economy shrunk in the fourth quarter at the fastest pace since 1980.

The dollar advanced versus the sterling on Friday, taking back some of its recent losses. The dollar rose to 1.4266, moving back toward a 23-year high of 1.3501, set earlier this year.

Against the yen, the dollar moved near 98 in choppy trading, once again unable to rise above the elusive 100 mark.

Friday, official data showed that consumer prices in Japan showed little or no change for the year to February, while company profits declined in China during the first two months of the year.

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