The U.S. dollar traded mostly lower early Thursday afternoon on profit-taking following sharp gains in recent days.

Dealers said the deutsche mark remained weak against currencies other than the dollar. The mark's weakness was based on a sense of disorder in Eastern Europe, dealers said.Hugh Walsh, dealer at ABN-Amro Bank, said the mark also weakened for other reasons. "Here we hear talk of the German economy weakening, troubles near its borders in the East, a winter food shortage in the former Soviet Union, the prospects for civil war in Slovenia," he said.

"Further, people say German rates have peaked and its economy is slowing."

Bruce English, dealer at Canadian Imperial Bank of Commerce, said there was strong two-way business and traders were taking quick profits.

"All this is because the market's uncertain of its next move," Mr. English said. "Here we (the U.S. dollar) rose about 7 percent in a week, and it's time to consolidate. Do we move strongly higher again, or back off and 'cool it' awhile? No one's certain," he said.

Steve Flanagan, dealer at Mitsubishi Bank, said the market was consolidating the past week's gains, and suggested traders were mulling comments by Johnson Smick International.

The Washington advisory firm said David Mulford, U.S. treasury undersecretary, told it that the Group of Seven leading industrial nations may intervene to sell dollars within the next several days.

Most dealers scoffed at the report, noting that most European nations are known to prefer a stronger dollar if only because it means a weaker mark.

The market showed little reaction to U.S. consumer price and state unemployment claims reports.

Though December consumer prices rose 0.3 percent, above the 0.2 percent rise forecast, dealers said that was offset by the 49,000 decline in state unemployment claims in the latest week.