NEW YORK (AP) — The dollar ended the week lower across the board on Friday amid concerns that interest rates will rise in Europe but could remain frozen or even decline in the US.Dollar sentiment turned negative as investors, who a day earlier had pared expectations for Federal Reserve rate cuts, began to waffle. Dollar gains earlier in the week, based on slightly higher-than-expected inflation figures, were deemed overdone and investors began selling dollars to book profits.

“There are still some concerns about the structural outlook for the dollar, in terms of interest rates,” said Daniel Katzive, foreign exchange strategist at UBS.

The dollar could retreat further if the market, which is looking for the Fed to cut rates in the fourth quarter of 2007, moves up its expectations to an earlier date, said Katzive.

Higher oil prices on Friday also weighed on the greenback as higher energy costs could place more strain on a US economy that’s already dealing with a softening housing market and a weak manufacturing sector. The price of a barrel of crude hit a 2007 high above $61 early in New York, but backed down to the $60 range later in the session.

The rise in oil prices came amid lower US supplies and concerns over oil-producing Iran after the UN nuclear watchdog agency on Thursday said Tehran had failed to comply with a deadline to stop nuclear enrichment.

During London trading Friday, the dollar advanced some against the euro after data showed business confidence in Germany was a bit less than expected. But the greenback quickly reversed itself as analysts digesting the data said it does change the consensus view that the European Central Bank in March is likely to lift its key lending rate to 3.75 percent from the current 3.50 percent.

Higher local interest rates tend to boost a currency because investors in those currencies are paid higher returns. The Fed’s benchmark rate currently stands at a relatively high 5.25 percent.

Meanwhile, a report on Friday showed the British economy expanded above trend in the final quarter of 2006, which gave the sterling a boost and provided marginal help to other European currencies as well.

“The (gross domestic product) data out of the UK continue to argue for further rate hikes ahead and our house view remains that the Bank of England will hike next at its May meeting by 25 basis points,” said analysts at ABN Amro Bank in an e-mail note.

Elsewhere, the Canadian dollar hit a fresh intraday peak for 2007 against its US counterpart on the back of higher prices for oil and commodities, Canada’s main exports. The dollar fell to C$1.1566, its lowest mark since December 22, but recovered some later in the session. Late afternoon Friday, the greenback was trading at C$1.1594 from C$1.1618 late Thursday.

Camilla Sutton, currency strategist at Scotia Capital, attributed the Canadian dollar’s rise to “oil, technicals and overall US dollar weakness.”

The dollar also fell against the yen after rising each of the other four days of the week. The dollar’s earlier gains had come after the Bank of Japan lifted its key lending rate to a still-low 0.50 percent and said any more hikes would be gradual.

This relaxed outlook on future BOJ rate hikes sparked renewed interest in a popular financial manouvre called carry trade, where investors borrow currencies in nations where interest rates are low and then buy currencies where interest rates are high, and pocket the difference.