* Dollar gains vs euro as stocks weaken
* Euro slides on Steinbrueck's comments, weak data
* Euro has biggest one-day slide vs dollar since Jan. 9
* Russia, IMF say dlr to remain top reserve currency
(Recasts, adds comment, updates prices, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 27 (Reuters) - The dollar rose on Friday,
on track for its best day in more than two months against the
euro, bolstered by a growing view that the European Central
Bank may be the next to purchase its own bonds to stimulate
growth.
Weak U.S. stocks also drew safe-haven bids toward the
dollar against the single euro-zone currency. The currency was
further pressured by comments from German Finance Minister Peer
Steinbrueck suggesting fiscal irresponsibility in Europe could
put the euro at risk.
"U.S. equity markets are weak, and that has helped the
dollar rally versus the euro; but in the background people are
also thinking that the the ECB could potentially move toward
quantitative easing," said David Watt, senior currency
strategist at RBC Capital Markets in Toronto.
Several European officials over the past week have
indicated an openness to quantitative easing, or the process of
flooding the banking system with funds to promote lending when
interest rates are already at zero.
Watt said the the dollar's rally was a "general unwinding
of its sell-off" when the Federal Reserve announced last week
that it would buy long-term U.S. government debt.
In early afternoon trading, the euro was down 1.8 percent
at $1.3290 <EUR=> from an intraday high of $1.3591, according
to Reuters data. The euro was headed for its worst one-day
performance since Jan. 9.
The euro hit a weekly low of $1.3258, severely testing the
strength of long-term technical support at the 200-week moving
average of $1.3380. The currency was down 2.5 percent for the
week, its worst week against the dollar since Jan. 25.
The euro's decline was mainly triggered by remarks from
Germany's Steinbrueck.
The finance minister told the German parliament: "Germany,
as a member of the EU, has a massive interest in the
credibility of the Stability and Growth Pact, which, as you
know, is not taken so seriously by some."
"If it is not taken seriously, I am telling you, the euro
will have trouble one day in terms of its own credibility and
stability." For details, see [].
The euro was also weighed down by weaker-than-forecast euro
zone industrial orders and German inflation data.
[] and []
The yen, meanwhile, rallied broadly on flows related to
last-minute fund repatriation by Japanese investors ahead of
the annual book-closing on March 31.
The euro was 2.5 percent down against the yen at 130.28 yen
<EURJPY=>, while the dollar was down 0.8 percent against the
yen at 98.00 <JPY=>.
The dollar's broad gains were also supported by comments
from a senior Russian central bank official and the
International Monetary Fund's managing director that the dollar
will remain the world's reserve currency for some time.
[] and [].
This cooled some of the fervor surrounding the debate on
the dollar's long-term standing as the top reserve currency.
(Additional reporting by Nick Olivari; Editing by Jonathan
Oatis)
