The euro's recovery made further progress yesterday as the single currency hit one-month highs against the dollar which dipped below 118.50 yen despite renewed intervention by the Bank of Japan.

Analysts said the US currency's generally weaker tone meant the Bank of Japan's intervention to buy dollars for yen late in Asia had only a limited impact, with dollar/yen dipping to test its lows for the day.

Strengthening sentiment on the euro combined with a more negative outlook for the US dollar. The euro was just below its session high of $1.0535 in late European trade, 4 per cent above the life low it hit last week. It was at $1.0403 late in Europe on Tuesday. It also gained ground against sterling, closing at 66.78p from 66.28p. The pound closed at 84.79p against the British currency from 84.13p.