NEW YORK (AFP) -- The dollar lost ground against other world currencies as data showed U.S. inflation was tamer than anticipated, and as a separate economic barometer showed growth remained robust in the eurozone.

The latest U.S. inflation news raised the odds that the Federal Reserve could move to trim interest rates, a possibility which would likely weaken the dollar's fortunes as foreign investors would earn lower returns from their U.S. investments, analysts said.

The U.S. currency suffered fresh losses after the Labor Department said U.S. consumer prices rose a weaker-than-expected 0.4 percent in April on a jump in energy costs.

The "core" inflation rate, excluding food and energy costs, which is viewed as a better gauge of inflation trends rose 0.2 percent and was in line with market forecasts.

"Inflation is the last stronghold for rate hawks struggling to at least keep rates unchanged. If the Fed takes weight of the steady downtrend in core inflation, the rate cut that futures are pricing in for the end of the year may come sooner rather than later," observed John Kicklighter, a currency analyst at Forex Capital Markets.

Meanwhile, the euro gained support after the European Union announced that the eurozone economy shifted down a gear in the first quarter with growth of 3.1 percent over 12 months although the impact of a German sales tax rise was less than feared.

Economic growth in the countries sharing the euro fell less than expected, however, after hitting a six-year record in the final three months of 2006, when the bloc's economy expanded 3.3 percent over one year.

And despite the slight cooling of growth the eurozone's economic growth still looks better than America's where growth slowed markedly to a 1.3-percent annualized growth spurt in the first quarter.

In late New York trade, the dollar was quoted at 1.2151 Swiss francs compared with 1.2189 Swiss francs on Monday.

The British pound was changing hands at 1.9849 dollars after 1.9795.