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RECORD U.S. TRADE GAP CUT IN FEBRUARY

The U.S. trade deficit, after beginning the year with a record gap, narrowed sharply in February even though America's deficit with Mexico hit an all-time high. Analysts hoped the overall improvement would provide support for the embattled dollar.

The deficit in both goods and services trade declined by 24.6 percent to $9.01 billion, as exports jumped by 2.7 percent to the second highest level on record while imports fell by 2 percent, still the third highest level ever, the Commerce Department reported today.The United States started the year with a record deficit of $11.95 billion, and even with today's improvement, the trade gap is running at an annual rate of $125.8 billion, far above last year's record of $106.57 billion.

This deterioration in the U.S. trade performance has been a major cause cited for the sharp fall in the value of the dollar, which has been setting new post-World War II lows against both the Japanese yen and the German mark.

The problem, analysts have said, is that after years of a growing trade imbalance, foreigners are no longer as willing to hold the flood of dollars the United States has sent abroad to pay for imported cars and television sets.

The decline in the February deficit was better than had been expected and analysts said they hoped the improvement would lend support to the dollar, which so far this year has lost nearly 20 percent of its value against the Japanese yen and more than 10 percent against the German mark.

Robert Brusca, senior economist at Nikko Securities in New York, cautioned against reading too much into the February trade improvement.

"While we did have a smaller deficit in February, it came after a huge imbalance in January. We still don't have any trend in place that would make you smile about the U.S. trade performance," Brusca said.

The narrower-than-expected trade deficit helped to lift the dollar slightly off its record lows. For the past two days, the U.S. currency has been battered by concerns over growing trade friction.