* Euro rises as stocks rally, risk-taking recovers
* Upbeat data fuel hope economic crisis has bottomed out
* Central bank meetings, led by ECB, in focus this week
(Recasts, updates prices, adds comments, changes byline)
By Wanfeng Zhou
NEW YORK, May 4 (Reuters) - The dollar fell against major
currencies on Monday as a rally in U.S. stocks and hopes that
the worst of the global economic crisis could be over eroded
the greenback's safe-haven appeal.
The euro rose to a one-month high above $1.34 after
positive news on U.S. home sales and construction boosted
investor appetite for risk. That helped it erase losses seen
after European Central Bank council member Axel Weber said
Germany won't resume growth until the second half of 2010.
"The worst is probably behind us. And that's certainly part
of the reason why we're seeing this broad-based rally in
equities and money moving out of the safety of U.S. dollars
into riskier currencies," said Kathy Lien, director of currency
research at GFT Forex in New York.
Thin trading volume has exacerbated currency moves, with
Britain and Japan shuttered for holidays, analysts said.
In early afternoon New York trading, the euro rose 1
percent at $1.3392 <EUR=>, near a $1.3425 session peak and well
off the day's low at $1.3212.
It also added 0.8 percent to 132.54 yen <EURJPY=>, near a
three-week high, while the dollar was down 0.1 percent at 98.98
yen <JPY=>.
Sterling rose 0.4 percent to $1.4978 <GBP=> while the
Australian dollar, boasting the highest interest rates among
developed currencies, traded near a seven-month high against
the greenback at $0.7384 <AUD=>.
Investors were cheered by a 3.2 percent jump in pending
U.S. home sales in March and the first increase in construction
spending since September. That followed better news on
manufacturing in Europe, China and India, supporting the view
that the deepest economic slump in decades may have bottomed
out. See [].
"The core view today is one of an incremental shift toward
recovery," said Andrew Wilkinson, senior market analyst at
Interactive Brokers Group in Greenwich, Connecticut.
BUSY WEEK
Despite a recovery in risk appetite, analysts said currency
investors will face risks before the week is out. While worries
have faded about stress tests showing some big banks need more
capital, investors remain wary of Thursday's ECB policy
meeting.
The central bank of the 16-country euro zone is expected to
cut interest rates to 1 percent and possibly announce further
steps, such as buying securities, to stimulate lending and
growth. Central banks in Britain, Norway and Australia also
meet this week.
"ECB officials have been candid in talking about their
differences in public, and Thursday is really D-Day for them,"
said UBS currency strategist Brian Kim.
He said any indication that the bank will follow the U.S.
Federal Reserve and others and embrace quantitative easing --
the process of flooding a banking system with money to boost
lending -- would likely weigh on the euro.
(Additional reporting by Steven C. Johnson; Editing by Kenneth
Barry)
