Euro gains as ECB hints at Aug hike

euro hit a fresh record high versus the yen and euro zone government bonds dipped on Thursday after the European Central Bank hinted it would pick up the pace of its monetary tightening campaign by hiking rates next month.

Wall Street opened marginally firmer, tracking gains in Europe as energy stocks rose after crude oil hit a record peak above $75 a barrel the previous session.

The ECB kept rates steady at 2.75 percent as widely expected but ECB President Jean-Claude Trichet said "strong vigilance" was needed to keep inflation expectations in check.

In addition, Trichet said the central bank would hold a face-to-face policy meeting on August 3, abandoning its usual habit of deciding interest rates by teleconference at one summer meeting.

"It's a fairly clear signal they are going to raise rates in August, not just because of the comments about strong vigilance but because they are going to meet physically on Aug. 3," said Ian Gunner, an economist at Mellon Financial.

The euro rose broadly on expectations that its yield attraction will increase from higher rates, which had been expected by the market later in August.

Against the yen, the euro touched a fresh record high at 147.41 yen before giving up gains to trade down 0.2 percent at 146.87 yen.

Against the dollar, the euro rose as high as $1.2783, and traded 0.2 percent higher at $1.2751 at 1433 GMT.

The dollar was down 0.4 percent against the yen at 115.20 yen.