By William L. Watts Worries over the continued fragility of the world economy helped underpin the U.S. dollar versus major counterparts on Thursday. The dollar was initially boosted by a Labor Department report showing 576,000 Americans filed initial claims for jobless benefits, more than economists expected. The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, rose to 78.596, up from 78.485 in North American trading on Wednesday. The U.S. currency gained against the Canadian dollar, Swiss franc and British pound. The euro fell to $1.4225, from $1.4237 late Wednesday. The dollar bought 94.32 Japanese yen, up from 93.93 yen Wednesday. The Japanese unit was lower overnight on a recovery in Asian equities markets. The dollar pared some gains but remained in positive territory after the Philadelphia Federal Reserve's index on manufacturing unexpectedly turned positive. Separately, the Conference Board said the index of leading economic indicators rose in 0.6% in July, its fourth consecutive monthly gain. A turn lower by oil futures also helped buoy the dollar, analysts said. Oil futures were off 37 cents to $73.47 a barrel in electronic trading on Nymex. The dollar and the yen have tended to lose ground as equities and commodities rally, undercut as investors move into assets perceived to hold more risk. The currencies have tended to gain as equities and commodities fall. However, markets seem very selective on Thursday of what data to focus on, with U.S. equities remaining higher. Overseas news Earlier in the session, focus was on Germany's finance ministry, which warned in a monthly report that it remains unclear whether the stabilization of the economy will hold, news reports said, just a week after German gross domestic product unexpectedly returned to growth in the second quarter. Also, Bank of Japan board member Atsushi Mizuno told business executives in western Japan that the country's export recovery could slow in the autumn, and that a sustained recovery would require "support from governments and central banks," Reuters reported. Those remarks and a much larger-than-expected rise in Britain's public borrowing in July combined to provide some support for the dollar despite a recovery by Chinese and European equity markets, said Michael Malpede, chief market analyst at Easy Forex in Chicago. "I think there are some question marks about the recovery outlook, which is giving a little bit of a boost to the dollar," he said. China's Shanghai Composite closed 4.5% higher early Thursday, rebounding after entering bear-market territory with a steep selloff the previous day. The British pound slipped 0.3% versus the dollar to trade at $1.6488 in recent action. The Office for National Statistics said government borrowing totaled 8 billion pounds in July as tax receipts tumbled, far exceeding forecasts for a 200 million pound borrowing requirement. The news underlined the fragile state of the British government's finances, highlighting worries about the potential for future tax hikes and the potential for an economic recovery, Malpede said. The pound, meanwhile, has clocked in one of the worst performances of any major currency in the past two weeks, a let-down after five months of rapid gains. But currency strategists say the notoriously volatile unit could still pick up some recently lost ground. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=JCq0bDa8LC%2BODNcp0i20pA%3D%3D. You can use this link on the day this article is published and the following day.

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