* Dollar index falls to fresh 4-month low, later trims losses
* Dollar hovers near series of lows vs euro, Aussie, kiwi
* Investor confidence seen continuing positive for now
By Charlotte Cooper
TOKYO, May 11 (Reuters) - The dollar fell on Monday, hitting
its lowest in seven weeks on the euro and seven months on the
Australian dollar, as investors emboldened by slowing U.S. job
losses extended diversification into other currencies.
The dollar index <.DXY> hit a fresh four-month low, following
through on a fall on Friday after data showed the U.S. economy
shed 539,000 jobs in April, fewer than expected and boosting
hopes the worst of the economic slump may be over.
Analysts said that with several risk events out of the way,
such as stress tests for U.S. banks and the jobs numbers,
investors seemed more confident, although it was hard to see what
there was in the way of near-term events to keep up that
momentum.
As a result currencies were expected to look to equity
markets for now, though Asian stocks were putting in a mixed
performance after gains on Wall Street on Friday and S&P futures
<SPc1> were down 0.6 percent, indicating a weak U.S. start later.
Sharada Selvanathan, currency strategist at BNP Paribas in
Hong Kong, said for euro/dollar at least, the shift stemmed more
from investors wanting to diversify their holdings as they grew
in confidence rather than from any specific euro attraction.
"It's an adjustment of positions that is not being favourable
to the dollar -- buying other overseas equity markets like Asian
and European ones," Selvanathan said.
"What you'll see is people adjusting their portfolios --
happy to buy euros, happy to buy a bit of sterling to reposition
their portfolios which are probably heavily dollar weighted now."
The ICE futures U.S. dollar index, which tracks the dollar
versus a basket of six major currencies, dipped to 82.292, its
lowest since early January <.DXY> after crashing through support
from its 200-day moving average on Friday.
The dollar index later trimmed its losses to stand at 82.501,
up 0.1 percent on the day.
"There seems to be a sea-change at work in terms of general
sentiment," said Sue Trinh, senior currency strategist at RBC
Capital Markets in Sydney.
"It will be an interesting week to see how sustainable that
is because there's nothing really in terms of event risk."
The euro hit a seven-week high at $1.3670 on trading platform
EBS at one point, although it later trimmed its gains to stand at
$1.3630 <EUR=>, little changed from late U.S. trading on Friday.
The euro climbed 1.7 percent on Friday, helped by a break
through its 200-day moving average, a key resistance on the
charts.
Analysts said buying by funds using trading models had been
behind some of the action.
The euro dipped 0.1 percent to 134.17 yen <EURJPY=R> after
briefly hitting a one-month high at 134.80 earlier. The dollar
was steady at 98.44 yen <JPY=>.
The New Zealand dollar climbed to its highest in six months
above $0.6100 <NZD=D4> and the Australian dollar briefly struck a
fresh seven-month peak in early Asian trade at $0.7714 <AUD=D4>
before slipping to $0.7671.
Both have gained steeply against the yen this year as
currencies seen benefiting once economic activity picks up,
particularly in China.
"Market sentiment does not favour yen buying," said a trader
for a Japanese bank. "Higher-yielding currencies are likely to
keep edging higher against the yen," he said.
The kiwi rose 0.7 percent to 60.00 yen <NZDJPY=R> but the
Aussie fell 0.8 percent to 75.46 yen <AUDJPY=R>, undermined by
profit-taking after it struck a seven-month peak in early trade
at 76.15 yen <AUDJPY=R>.
(Additional reporting by Masayuki Kitano; Editing by Chris
Gallagher)
(Reuters Messaging: charlotte.cooper.reuters.com@reuters.net;
(Email: charlotte.cooper@thomsonreuters.com; +81 3 6441 1870))
