LONDON (Reuters):

The dollar ticked higher yesterday, buoyed by expectations that the United States Federal Reserve will reiterate inflation concerns after this week's policy meeting, while stocks were mixed after patchy earnings.

The Federal Open Market Committee began its two-day meeting late yesterday and is widely expected to leave rates unchanged at 5.25 per cent today, for the third successive time.

But a series of stronger-than-expected U.S. economic data has forced markets to reconsider forecasts for a rate cut next year, pushing up bond yields and boosting the attraction of the high-yielding U.S. dollar.

Some analysts think the Fed might yet raise rates again to keep a lid on prices.

"We remain positively disposed to the dollar right now ... because we think the Fed will sound a bit more hawkish tomorrow and will hike rates again in the next few months," Bear Stearns' currency strategy team wrote in a research note.

The dollar edged up against the euro, which was trading at US$1.2540, and also rose against the yen at 119.50 yen.

Mixed results

Stocks were mixed as investors digested a slew of corporate results from the third quarter earnings season.

By 0902 GMT, the pan-European FTSEurofirst 300 index was 0.2 per cent weaker at 1,447.5 points, having closed at its highest level since mid-2001 on Monday.

The Dow Jones industrial average ended at a record closing high, up 114.54 points at 12,116.91, but Japan's Nikkei average closed down 0.1 per cent at 16,780.5 points as profits fell at household products group Kao Corp.

Underlying commodities were mostly softer, with U.S. light crude oil retreating further below US$59 a barrel as traders waited for evidence that other OPEC members would follow Saudi Arabia's lead in cutting output.