* China should increase holdings of EUR, JPY - Chinese report
* Yen gets boost from report, off 1-mth low vs dlr
* Pound sell-off intensifies on economic gloom
By Satomi Noguchi
TOKYO, Oct 26 (Reuters) - The dollar fell to a 14-month low
against the euro on Monday as a Chinese report saying Beijing
should increase its holdings of euros and yen in its foreign
reserves led investors to sell the greenback.
The yen also got a boost from the opinion piece in the
Financial News, a paper published by the People's Bank of China,
which said that the dollar should remain the principal currency
in China's foreign exchange reserves but that the share of euros
and yen should increase. []
The Australian dollar also benefited from the article as
investors believe the Aussie has been included in the currencies
that China and other central banks have bought to diversify
foreign reserves.
"The comments from China are pretty strong and that is
supporting the euro," said Tony Bieber, forex analyst at Suncorp.
"This is quite good for the Aussie as those diversifying into
the euro are also buying the Australian dollar."
The euro <EUR=> rose as high as $1.5064 on trading platform
EBS, its highest since August 2008, pushing up from below $1.50
in early trade.
The euro's gains were also helped by European Central Bank
Governing Council member Christian Noyer making no comment on
euro/dollar, which speculators took as an excuse to push the
single currency higher.[]
But the European single currency trimmed gains after the
Chinese researcher who wrote the opinion piece said he was
expressing purely personal views.[]
"The news is moving the market this morning to bring euro/dlr
higher, with the pair looking very biddish at its lows," said a
trader for a Japanese trust bank.
The dollar index, a gauge of the greenback's performance
against six other major currencies, fell 0.2 percent to 75.329
<.DXY> towards a 14-month low of 74.940 touched last week.
The dollar fell 0.3 percent to 91.75 yen <JPY=>, retreating
from a one-month high of 92.23 yen hit on EBS earlier in the day.
The Australian dollar erased its earlier losses and rose 0.3
percent to $0.9241 <AUD=D4>, rebounding towards a 14-month high
of $0.9330 reached last week.
The Aussie traded softly earlier in the day as data showed
Australia's third-quarter producer price index (PPI) numbers rose
only modestly, taking pressure off the central bank for an
aggressive rate rise. []
The pound extended losses after data on Friday showed the UK
economy was still struggling, disappointing investors who had
been paring short positions betting on an early return to growth.
Sterling's drop was compounded by speculation that U.S.
interest rates could be headed higher sooner than expected.
The pound <GBP=D4> broke past support at $1.6300 to fall as
low as $1.6251 from $1.6313 late on Friday when it lost nearly
1.9 percent.
Traders say investors are set to aggressively sell the pound
on expectations that a sluggish road to recovery would prompt the
Bank of England to keep rates near zero for a long time.
[]
(Additional reporting by Anirban Nag; Editing by Joseph Radford)
