* Dollar index at 4-month low, euro hits 7-week high vs dlr
* Strong UK data supports sterling, high-yielders
* Persistent optimism on global economy fuels risk rally
(Adds quotes, updates prices, changes byline)
By Jessica Mortimer
LONDON, May 12 (Reuters) - The dollar fell to a four-month
low against a currency basket on Tuesday as solid UK data fanned
optimism that the global recession is easing, boosting sterling,
as well as the euro and other perceived higher-risk currencies.
Stronger-than-expected UK retail sales, housing market and
industrial production data pushed sterling up well over 1
percent versus the dollar, while the euro also hit a seven-week
high against the U.S. currency.
The higher-yielding Australian and New Zealand dollars
benefited from the rally in riskier assets, which helped to push
oil prices to a six-month high just below $60 a barrel, while
U.S. stock futures <SPc1><JDc1> also edged higher.
"The UK data is highlighting that the worst is probably
behind us, which is giving a bit of a bid to riskier assets,"
RBC Capital Markets currency strategist Christian Lawrence said.
"It makes sense to see sterling rallying so much after the
data, while the Australian and New Zealand dollars have been bid
for most of the session," he added.
European Central Bank President Jean-Claude Trichet said on
Monday that the global economy is at an "inflection point" and
could turn the corner soon [].
At 1154 GMT the dollar index was down 0.8 percent on the
day, hitting a four-month low of 82.138 <.DXY>.
The dollar index is well on track for its third consecutive
close below the 200-day moving average and is below the
longer-term technical support -- now resistance -- of the
200-day moving average at 82.755.
The euro rose 0.9 percent to a seven-week high of $1.3695
<EUR=>. It is firmly on track for a third daily close above the
200-day moving average and second straight week above the
200-week moving average.
Sterling was up 1.4 percent on the day at $1.5336 <GBP=D4>,
its highest since Jan. 9.
The Australian dollar was up 0.9 percent at $0.7647 <AUD=>,
while the New Zealand dollar gained 0.6 percent to $0.6049
<NZD=>.
Against the yen, the euro rose 0.4 percent to 132.93 yen
<EURJPY=R> and the dollar fell 0.4 percent against the yen at
97.18 yen <JPY=>.
"GREEN SHOOTS"
UK surveys overnight showed retail sales rising at their
fastest rate in three years last month, while house prices
declined at their slowest pace in 15 months [].
Adding to this, data also showed UK industrial and
manufacturing output fell less than forecast in March
[].
Investors also took heart from data from China overnight,
which showed investment spending surged even though exports fell
more steeply than expected [].
"In the bigger picture not much has changed. The green
shoots still have roots," said Maurice Pomery, managing director
of Strategic Alpha in London.
Michael Hart, currency strategist at Citigroup in London
advised caution, however, noting the numbers are merely "less
catastrophic" and that the currency market's technical picture
is triggering much of the dollar selling from model funds.
Australia's government unveiled on Tuesday its largest
deficit on record, cut its growth predictions and raised its
jobless forecasts [], though this failed to put a
significant dent into the global risk rally.
(Reporting by Jessica Mortimer; additional reporting by
Jamie McGeever; editing by David Stamp)
