TOKYO -- The dollar rose against the euro Monday as confidence in the U.S. economy grew while data from the 12-nation euro zone continued to disappoint, dealers said.

The euro fetched 1.1223 dollars at 02:00 P.M. (0500 GMT) down from 1.1260-1270 dollars on Friday afternoon in New York, AFP reported.

Against the yen, the European single currency bought 133.93 compared with 134.20-30 in New York late Friday.

After dismal Italian numbers last week and the confirmation Thursday of continued contractions in the economies of Germany and the Netherlands, the European Commission underscored the gloom with a forecast of third-quarter growth in the euro zone at 0.4 percent from April-June, at best.

The commission -- the European Union's executive arm -- did not even rule out the risk of stagnation and for the final three months of the year forecast minuscule growth of 0.2-0.6 percent.

In contrast, the U.S. economy is expected to enjoy strong growth in the second half of the year, which should feed through to Japan as demand for exports grows, analysts have said.

"The euro is under modest selling pressure," said MMS managing analyst Hideki Naito.

"U.S. and European fundamentals (are diverging). The GDP (gross domestic product) figures released last week showed the euro zone was just flat with Germany negative.

In the mean time, Japan and the U.S. have shown strong GDP growth," he said.

Between March 21 and May 27, the euro surged against the dollar from 1.0501 to 1.1935 as fears grew about the world's largest economy due to the U.S.-led war in Iraq.

But it has since lost some 50 percent of the gains as concerns in the euro zone take precedence and confidence in the United States returns thanks to the end of the Iraq war and following a raft of improved economic data.

Investors were waiting for new numbers due out from Europe on Tuesday such as consumer price figures and also industrial output, said Naito.

"The market's eyes are now on the euro and German economic data following the weak GDP data released last week," Naito said.

Meanwhile, the dollar traded at 119.34-36 yen at 02:00 P.M. compared with 118.96-99 yen in New York on Friday afternoon.

A surge in the Tokyo Stock Exchange's Nikkei-225 index, which was trading just above the key 10,000 point mark in morning trade, failed to support the yen as the rise lacked strength, Naito said.

"The Nikkei is still struggling to maintain its gains above 10 K," he said.

The headline index was trading up 144.7 points at 10,008.17 at 02:00 P.M.

In early afternoon trade in Singapore, the dollar fell to 1.7465 Singapore dollars from 1.748 on Friday, 8,465 Indonesian rupiah from 8,520, 34.332 Taiwan dollars from 34.345, 1,174.7 South Korean won from 1,178.5 and 55.00 Philippine pesos from 55.015.

The greenback was steady at 41.58 Thai baht.