1st LD Writethru: U.S. dollar soars against euro on policy divergence

The U.S. dollar climbed to a 12- year high against the euro on Wednesday as the European Central Bank (ECB) added stimulus into the economy while the Federal Reserve was moving closer to the interest rates hike.

The euro slipped to 1.0536 U.S. dollars around 2 pm, the lowest level since April 2003. In absence of major economic data, analysts said the policy divergence between central banks in Europe and U.S. played a significant role in the decline.

The ECB began its landmark 60 million euros per month bond buying program on Monday with the aim to fend off deflation and boost the eurozone economy by pumping more money into real economy.

Meanwhile, the sound recovery of U.S. economy has bolstered market speculation that the Fed would raise interest rates in mid- year. Fed officials will gather next week in a policy meeting at which they are expected to unleash more clues about the timing of Fed's first rate hike in almost a decade.

The U.S. dollar rose against other major currencies on Wednesday. The dollar index, which measures the greenback against six major peers, was up 1.16 percent at 99.763 in late trading, the highest level in 12 years.

In late New York trading, the euro declined to 1.0535 dollars from 1.0699 dollars in the previous session, and the British pound dropped to 1.4934 dollars from 1.5073 dollars. The Australian dollar slipped to 0.7578 dollars from 0.7617 dollars.

The U.S. dollar bought 121.51 Japanese yen, higher than 121.10 yen of the previous session. The U.S. dollar edged up to 1.0102 Swiss francs from 0.9988 Swiss francs, and it climbed to 1.2762 Canadian dollars from 1.2672 Canadian dollars. Endite