The euro rose slightly against the dollar and the pound yesterday, but conflicting signals from politicians and central bankers put the brakes on the currency's rally. It ended the day in Frankfurt at $0.9014, up about half a cent on the previous day, and at 0.5879 against sterling.

The euro lost early gains against other currencies after Mr Klaus-Dieter Kuhbacher, a member of the Bundesbank council, said that any attempt by the European Central Bank (ECB) to intervene unilaterally in the markets was doomed to failure. He said that, for intervention to succeed, Japan and the US would have to join the effort to boost the euro's value.

But he saw no sign that Tokyo and Washington were willing to co-operate.

"Any intervention by the ECB against these big partners would have no effect," he said.

Mr Kuhbacher is not a member of the ECB's governing council, but traders interpreted his remarks as a sign that Germany would oppose unilateral intervention in the markets. The governing council meets in Frankfurt tomorrow amid growing anxiety over the euro.

German Chancellor Gerhard Schroder attempted to play down such concerns yesterday, pointing out that the currency's weakness was helping German exporters.

"There is no other country in the world which is more dependent on exports than Germany. We shouldn't cry when our exporters benefit," he said.

The French finance minister, Mr Laurent Fabius, added to the markets' confusion by stressing that EU ministers and the ECB agreed that market intervention was still an option.

"In response to the question that was put to us - and the question was: `Is central bank intervention possible?' - the answer we gave after consultation among us and the central bank was that this instrument existed, that it was at our disposal and that this remained in the minds of each and every one," he said.