The dollar gained against the Swiss franc on Thursday and approached a four-and-a-half-year high against the yen as investors continued to punish low-yielding currencies in a quest for higher returns.

Against the euro, the greenback was little changed, giving up earlier gains made in the wake of the highest reading of growth on a regional U.S. economic indicator since April 2005.

The day's biggest winners were the Australian and New Zealand dollars, which have benefited as strong global economic growth has driven demand for the two countries' commodities, putting upward pressure on their interest rates.

We're seeing the dollar gain against low yielders like the yen, but this is not really a dollar story -- it's about strong global growth and demand for high-yielding commodity currencies, said Adnan Akant, head of foreign exchange in New York at money manager Fischer Francis Trees & Watts.

Lehman Brothers said on Thursday it was looking to use the yen and Swiss franc to finance a heavy allocation to higher-yielding currencies including the Australian and Canadian dollars, and the Norwegian crown.

Late in New York trade the dollar was up 0.2 percent at 123.70 yen after rising to 123.75 yen earlier, not far from a fresh four-and-a-half-year high. Against the Swiss franc, the lowest-yielding major currency in the world after the yen, the dollar climbed 0.35 percent to 1.2415 francs.

The Australian dollar was up 0.4 percent at US$0.8465, in sight of an 18-year peak, while the New Zealand dollar rose as high as $0.7660, the highest level since the currency was floated in 1985.

Attempts by New Zealand's central bank to intervene in the market this month have failed to curb the kiwi's gains, as investors flock to the highest interest rates in the industrialized world, of 8 percent.

The euro was trapped in an unusually narrow range for the fourth straight session against the dollar, trading down slightly on the day at $1.3585.

An unexpectedly large gain in Philadelphia area factory output in June provided a momentary boost to the dollar, which has closely tracked bond yields in recent weeks, but the greenback eased as U.S. Treasury yields failed to hold gains.

Some analysts said fears of trouble related to subprime mortgage investments by two hedge funds managed by Bear Stearns were pushing some investors into short-dated Treasuries.

The dollar has paused this week after a two-month rally driven by solid economic data, which has wiped out investor expectations that the Federal Reserve would cut interest rates by a half percentage point or more this year.

With no major U.S. economic data due on Friday, the market's main focus will be the Ifo survey of business sentiment in Germany, the euro zone's largest economy.

The business climate index for June is expected to come in at 108.4, versus 108.6 in the previous month, according to a Reuters poll

(Additional reporting by Steven C. Johnson)

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