WASHINGTON ? The US dollar ended 2009 higher against the euro and the yen on Thursday after fresh US labor data indicated a possible easing of unemployment, boosting expectations for economic growth and a possible earlier interest rate hike.

The euro fell to $1.4323 in New York at 2200 GMT from 1.4341 late Wednesday.

The single European currency climbed to $1.4441 at one point but could not sustain the rise.

The dollar also rose against the Japanese currency, trading at 93.00 yen from 92.42 yen Tuesday.

Trading was thin ahead of the New Year holiday on Friday.

The dollar's strength was partly attributed to a drop in new claims for jobless insurance benefits to the lowest level in 17 months on signs that unemployment at 26-year highs may ease as the economy recovers from recession.

The seasonally adjusted initial claims for unemployment insurance benefits in the week ending December 26 stood at 432,000, a decrease of 22,000 from the previous week's revised figure of 454,000, the Labor Department said in a report.

The decline was much steeper than the 460,000 figure expected by most economists, suggesting the brutal pace of layoffs is easing as the economy pulls out of a deep recession since December 2007.

"The fact that fewer Americans filed claims for unemployment benefits in the waning months of 2009 is prompting investors to expect sustainable economic growth during the ensuing year," said Mike McGrath of PNC Bank.

"Although the dollar will bring in the New Year significantly weaker versus most currencies, the month of December has displayed a potential bottoming in response to an improving global economy and the likelihood of an interest rate hike by the Fed in 2010," he said.

The Federal Reserve has held its key interest rate at virtually zero percent since December 2008 and a rate rise was expected to push the dollar higher.

The greenback had taken a battering against the euro and other key currencies as the United States took a variety of measures to pump-prime the recession-struck economy, pushing the budget deficit to record levels.

In late trade in New York, the dollar fell to 1.0341 Swiss francs from 1.0359 Wednesday.

The pound climbed to $1.6168 from 1.6078.