Aug. 3 (Bloomberg) -- The dollar advanced against the yen and traded near the highest in five days versus the euro as some traders turned their attention from terrorism concerns to reports expected to show U.S. economic growth is accelerating.

A widely watched measure of the services industry rose for the first month in three during July, an industry report tomorrow may say, and government figures on Friday may show U.S. employers hired about a quarter of a million jobs, according to the median forecast of economists polled by Bloomberg News.

"There isn't really any soft economic data out there; the potential is for more dollar gains,'' said Mark McFarland, director of currency strategy at UBS AG in London. "Terrorism may have had a short-term effect.'' Some traders also sold yen as oil prices climbed to a record, he said.

Against the yen, the dollar gained to 110.93 at 8:49 a.m. in London from 110.72 late yesterday in New York, according to EBS, an electronic foreign exchange dealing system, when it fell after the U.S. said al-Qaeda may attack financial institutions including the New York Stock Exchange. The U.S. currency traded at $1.2025 per euro from $1.2026.

Much of the information leading to yesterday's heightened terror alert at various buildings in New York and Washington was collected three to four years ago, the New York Times reported, citing law enforcement officials. The Swiss franc was little changed against the dollar after strengthening as much as 1 percent yesterday.

"The combination of economic news, which is still rather good for the U.S. and the terror alert not being as newsworthy as we thought added up to a stronger dollar,'' said Adam Cole, a senior currency strategist at RBC Capital Markets in London.

Oil Prices

Some investors also sold the yen as oil prices rose to a record, said Keizo Tanaka, manager of the market trading office in Tokyo at Resona Bank Ltd. Crude for September delivery climbed after OPEC President Purnomo Yusgiantoro said the group may not be able to increase production fast enough to lower prices.

"Japan heavily depends on oil imports and rising crude oil prices are simply bad for the yen,'' said Tanaka. The country imports almost all its oil, according to government figures.

Almost 49 percent of the traders, investors and strategists polled by Bloomberg on Friday from Tokyo to New York advised buying the U.S. currency versus the euro, up from 41 percent a week ago. About 47 percent recommended buying the dollar versus the yen, from 36 percent a week ago.

'Fundamentally Bullish'

The Institute for Supply Management's services index probably rose to 61.5, from 59.9 in June, the lowest since December, according to the median of 61 forecasts in a Bloomberg News survey. The report is released tomorrow.

The institute said yesterday its factory index rose to 62 in July from 61.1 in June. Readings above 50 signal expansion. The gauge has exceeded 60 for nine months, the longest stretch since July 1972 through June 1973.

Investors are "now back to focusing on strong U.S. economic fundamentals,'' said Greg Salvaggio, vice president of currency trading at Tempus Consulting in Washington. "We're fundamentally bullish on the dollar for the remainder of this year.''

The Labor Department is expected to report Friday almost a quarter of a million jobs were created in July, more than double the June figure, according to the median of 70 forecasts in a Bloomberg News survey.

The U.S. currency, which in July posted its first monthly advance in three, climbed 3.4 percent compared with the euro since Federal Reserve Chairman Alan Greenspan said two weeks ago the economic expansion is "more broad-based'' and is creating jobs. The dollar is 2.6 percent higher against the yen.

"The trend for the solid performance of the dollar should remain in place on the outlook of higher U.S. rates,'' said Kikuko Takeda, manager of the foreign exchange and treasury division in Tokyo at Bank of Tokyo-Mitsubishi Ltd. "Based on that, any good data which meets expectations will support the dollar.'' The dollar may rise to 112 yen this week, she said.

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