Dollar Generally Lower in Europe; Gold Advances

The U.S. dollar was generally lower today in active European trading following rumors that U.S. banks might cut their prime lending rate. The British pound still hit a new low. Gold prices rose.

Currency dealers said the U.S. currency fell on speculation that major U.S. banks would drop the prime rate--the rate charged to their most creditworthy corporate customers--to 10.5% from the prevailing 10.75%.

The pound sterling fell to an all-time closing low of $1.1330 after dipping to $1.1300 in afternoon trading, compared to $1.1438 Wednesday. The previous record closing low of $1.1403 was set Monday.

In Tokyo, where trading ends before it begins in Europe, the dollar closed at 253.60 Japanese yen, down from Wednesday’s 255.00 yen. In Later London trading, the dollar was quoted at 254.15 yen.

Other late dollar rates, compared to rates late Wednesday, were: 3.1540 West German marks, down from 3.1550; 2.6472 Swiss francs, up from 2.6462; 9.6620 French francs, down from 9.6775; 3.5617 Dutch guilders, down from 3.5675; 1,939.75 Italian lire, down from 1,941.12, and 1.3210 Canadian dollars, up from 1.3200.

Gold bullion prices rose as the dollar weakened.

Gold was quoted in London at a late bid price of $304.25 an ounce, up from $301.25 Wednesday.

Earlier, in Hong Kong, gold rose $5.46 to close at $304.71 bid.

Silver was quoted in London at a late bid of $6.105 an ounce, up from $6.035 Wednesday.