DOLLAR DROPS ON PROFIT-TAKING AFTER CLIMBING TO 8-YEAR HIGH

DOLLAR DROPS ON PROFIT-TAKING AFTER CLIMBING TO 8-YEAR HIGH

* Noon Tuesday - The U.S. dollar fell on profit-taking after climbing to eight-year highs regularly in the last few days.

The dollar was trading at midday Tuesday at 144.28 yen, down from 146.32 yen late Monday, and at 1.7978 Deutsche marks, down from DM1.8105.''Turnaround Tuesday has unfolded,'' said Marc Chandler, senior analyst at Deutsche Bank in New York.

However, the dollar's pullback may be simply corrective in nature and not necessarily a sign that the dollar will return to its recent lows, he said.

Dealers dismissed rumors that U.S. Treasury Secretary Robert Rubin was going to resign.

U.S. industrial production surged in May, rising a larger-than-expected 0.5 percent, while the capacity utilization rate came in at 82.2 percent. The numbers are another sign of the U.S. economy's overwhelming strength relative to the rest of the world.

* 9 a.m. Tuesday - The dollar plunged against the yen Tuesday morning following a report that U.S. Deputy Treasury Secretary Lawrence Summers will testify before a congressional committee, and that he may discuss the yen's destabilizing effect on markets.

The rumor coincided with another report that said Mr. Summers was to meet President Clinton later Tuesday to discuss U.S.-Russian relations and also to consider ways to halt the yen's slide, including intervention.

The dollar was trading Tuesday morning at 144.32 yen, down from 146.15 late Monday, and at 1.8003 Deutsche marks, down from DM1.8105.

U.S. consumer prices rose 0.3 percent in May, the biggest gain since December 1996. May housing starts fell 0.7 percent.

Traders said the dollar was overbought against the yen and it was natural for market participants to take profit. They said the market was susceptible to rumors.

* 3 p.m. Monday - The dollar climbed to a fresh eight-year high of 146.63 yen, breaking the previous overnight level of 146.54, on the latest comment out of the EU summit in Cardiff, Wales, indicating that yen intervention was not part of the EU ministers meetings.