Array

TOKYO, Apr 6 (Reuters) The euro hit an all-time high against the yen and hovered near a two-month peak versus the dollar on Thursday, supported by expectations that the European Central Bank will boost interest rates in coming months.

The central bank is widely expected to keep rates unchanged at its policy meeting later in the day but traders expect ECB President Jean-Claude Trichet at his new conference after the meeting to signal that rates will climb next month.

''The likelihood of a rate hike in May has risen,'' said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp. ''People had thought the ECB would raise rates only every three months, but now they think it could happen every two months.'' Some traders speculate that any hawkish comments from Trichet could even fan expectations of a further rate rise in July.

The upbeat outlook for euro zone rates contrasts with a growing view that the U.S. Federal Reserve may wind up its tightening campaign after a widely expected rate increase in May.

In early Asian trade, the euro was at $1.2280, slightly down from the level in late U.S. trade but still in sight of the two-month high of $1.2306 hit on Wednesday.

The euro hit a record high of 144.67 yen on electronic trading platform EBS, before easing to around 144.35 yen, little changed on the day.

The European common currency also stood at 70.15 pence, just below Wednesday's 15-month high of 70.20 pence The dollar firmed slightly to 117.55 yen. Most traders expect the U.S. currency to stick to its recent 115.50-119.50 yen range in the near term.

Dollar bulls were hoping that a strong reading for the monthly U.S. jobs report on Friday might stoke expectations that the Fed's tightening may continue for a while.

U.S. Treasury Secretary John Snow said on Wednesday that the March employment report would contain ''good numbers'', but his comments failed to give the dollar much of a boost.

REUTERS PG VP0710