LONDON (AFP) - The dollar edged higher against the euro after a pickup in US personal income and comments from a Federal Reserve official pointed towards further hikes in US interest rates.

The single European currency in late-day deals was at 1.2715 dollars, down from 1.2738 late Friday in New York.

The dollar was meanwhile trading at 117.42 yen against 117.57 on Friday.

In Washington the government said personal incomes rose 0.5 percent in September after increasing by 0.4 percent in August. The latest figure eclipsed the 0.3 percent gain economists had expected.

Real disposable incomes, which are inflation-adjusted and measure income after taxes, rose 0.8 percent in September, the largest gain since September 2005.

The figures helped offset declines in key inflation measures and in turn propped up the dollar.

"The dollar's positive reaction reflected a sense that this report was the latest confirmation of a soft landing scenario for 2007.

"Full employment conditions and strong personal income growth has made the US consumer highly resilient to shocks that would have ordinarily derailed spending," said Michael Woolfolk at the Bank of New York.

"While there is no doubt that the housing market is cooling as widely feared, the drop in energy prices and recent record highs in the Dow (stock exchange index) are bolstering confidence and supporting spending ahead of the holiday shopping season," he added.

The personal consumption expenditure price index, a measure of inflation, fell 0.3 percent in September, in its first decline since November 2005.

Meanwhile, core inflation, as measured by the PCE price index excluding food and energy, rose 0.2 percent in September after increasing by 0.3 percent in August.

Core inflation has risen 2.4 percent in the past 12 months, slightly slower than August's 2.5 percent gain but still above the Federal Reserve's comfort zone of 1.0-2.0 percent.

Separately, Jeffrey Lacker, a member of the US Federal Reserve's rate-setting committee, went on record to say the US economy remained well-placed to withstand further rate hikes.

His views helped the dollar steady but the impact was in the end rather muted, as the currency remained under pressure from weak US third quarter growth data released last week.

The Commerce Department estimated that the US economy grew at a 1.6 percent annual rate, down on the 2.6 percent growth in the previous three months and the heady 5.6 percent recorded in the first quarter.

Elsewhere the pound bounced higher after some surprisingly strong British property market and money supply numbers.

British mortgage approvals hit their highest in over two-and-a-half years in September, while mortgage lending growth stayed steady, figures from the Bank of England showed.

The figures suggested that the British housing market remained surprisingly buoyant, further suggesting that the Bank of England will raise interest rates by a further quarter point this month.

A Bank of England interest rate rise this month to 5.0 percent is already fully expected.

Additionally, the central bank said M4 money, a broad measure of money supply, posted its biggest rise in 16 years on an annual basis in September, raising concerns about medium-term demand and inflation pressures.

The euro was changing hands at 1.2715 dollars against 1.2738 dollars on Friday, 149.29 yen (149.80), 0.6685 pounds (0.6712) and 1.5889 Swiss francs (1.5907).

The dollar stood at 117.42 yen (117.57) and 1.2490 Swiss francs (1.2454).

The pound was being traded at 1.9022 dollars (1.8978).

On the London Bullion Market, gold prices advanced to 608.50 dollars per ounce from 596.25 dollars late on Friday.

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