Dollar pares gains as Europe discusses rules

NEW YORK (AP) - The dollar pared its gains against the euro on Friday as European Union financial officials worked on new budget rules aimed at limiting future debt crises for member countries.

Trading between the U.S. currency and the currency for 16 European countries has been extremely volatile this week, ranging more than 5 cents from low to high. An unexpected, solo move by Germany to restrict trading of European government debt and financial shares caused great uncertainty about regulation and uncoordinated policymaking in the EU, propelling the safe-haven dollar. Speculation that the European Central Bank was planning to buy euros on the market also boosted the shared currency.

In morning trading in New York, the euro fell to $1.2537 from $1.2575 late Thursday but was above its lows below $1.25 in earlier dealings in Europe.

The euro has jumped from a four-year low of $1.2146 on Wednesday to $1.2672 early Friday.

On Friday, the German parliament approved the country's share of the euro750 billion (nearly $1 trillion) package meant to stem the debt crisis.

But beyond the debt crisis in Greece that the huge aid deal was designed to alleviate, markets were still distressed about the prospect of slowing growth and increasing regulation in Europe, Credit Suisse foreign exchange analysts said in a research note.

That could hit global trade, hurting exports in the U.S. and Asia. Uncertainty in the banking sector could lead to a freeze-up in credit similar to the financial crisis of fall 2008.

U.S. officials are worried. On Thursday, the government said Treasury Secretary Timothy Geithner is going to the U.K. and Germany next week to discuss "the economic situation in the region and the measures being taken to restore global confidence and financial stability and to promote global recovery" with European finance officials and Jean-Claude Trichet, the head of the European Central Bank.

In other trading Friday morning, the British pound slid to $1.4369 from $1.4432, while the dollar slipped to 89.49 Japanese yen from 90.10 yen.

The dollar was also slightly higher versus the Swiss franc and Canadian dollar, and gaining on the Australian and New Zealand dollars and the Brazilian real and Mexican peso.