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U.S. HITS SNAGS IN BID TO CUT TRADE GAP

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The strong dollar and slower economic growth overseas are hampering U.S. exports and frustrating America's efforts to cut its huge trade deficit.

Some economists predict the August trade gap will rise to as high as $9.5 billion from $7.58 billion in July when figures are released Tuesday."Growth in exports is slowing down," said economist Kevin Logan at Swiss Bank Corp in New York. "And imports will rise as long as there's some growth in the U.S. economy."

Recent events have conspired against the trade deficit, which has been running at about $8 billion a month, despite the desire by the Group of Seven (G-7) industrialized nations to narrow it.

U.S. exports, which gained steadily from mid-1987 into the spring of 1989, are now leveling at around $31 billion a month. Imports, fueled by domestic consumption, are hovering around $40 billion.

A key culprit behind the entrenched deficit is the dollar, which is showing resistance, and even gaining ground, despite attempts by the G-7 central bankers to knock it down.

The dollar got a kick this week by comments from Federal Reserve chairman Alan Greenspan, who said the central bank's main goal was to fight inflation, not the high-flying dollar.

The Fed has also decided to keep monetary policy on hold and maintain interest rates at what economists say are relatively high levels, attracting foreign investors into U.S.-based assets and providing a foundation for the bullish dollar sentiment.