* Dollar touches six-week high against the euro
* Pound falls to 23-year trough against dollar at $1.3502
* UK in recession as economy contracts 1.5 percent
* US stocks rebound, oil surges in late trading
(Adds comments, updates prices, changes byline)
By Vivianne Rodrigues
NEW YORK, Jan 23 (Reuters) - The U.S. dollar touched a
23-year high against sterling and a six-week high versus the
euro on Friday as weak UK and euro zone data led investors to
take refuge in the greenback.
The dollar pared gains in late trading in New York as US
stocks rebounded and crude prices surged, easing some risk
aversion.
The pound and euro fell to session lows right after data
showed the UK economy contracted by 1.5 percent in the fourth
quarter, far more than analysts had expected and confirming a
recession. For details, see []
Investors took little encouragement from surveys showing
the euro-zone manufacturing and services sectors contracted at
a slightly slower pace in January, since they remain deep in
recessionary territory [].
The yen jumped on the back of its perceived safe-haven
status, hitting record highs against the pound and nearing
seven-year highs against the euro.
The U.S. dollar and the yen "continue to benefit from the
weak financial and economic environment," said Marc Chandler,
global head of currency strategy at Brown Brothers Harriman in
New York.
The euro touched a six-week low against the dollar at
$1.2766 earlier, but it last traded little changed at $1.2989
<EUR=>.
The pound <GBP=> tumbled to hit another 23-year low of
$1.3502 before recovering to $1.3799, down 0.4 percent on the
day.
Sterling has come under severe pressure recently as worries
about a very weak economy have combined with concerns about the
UK's troubled banking sector and the parlous state of
government finances.
The dollar was also supported by comments from U.S.
Treasury Secretary nominee Timothy Geithner, who said a strong
dollar is in the interest of the United States. His remarks
came on Thursday when he won the Senate Finance Committee's
backing to head the U.S. Treasury. []
The yen edged higher with the euro down 0.1 percent
<EURJPY=> at 115.20 yen. It recently traded at a seven-year low
just above 112 yen.
The dollar was last almost flat against the yen at 88.80
yen <JPY=> in a volatile session in which the greenback swung
between gains and losses.
"We have these moves overnight (in dollar/yen) and then
Europe uses us to square up," said John McCarthy, director of
foreign exchange trading at ING Capital Markets. "When the dust
settles the Dow is down".
Lower U.S. stocks, exemplified by the Dow Jones industrial
average, typically indicate risk aversion and make the yen
slightly more preferable to the dollar. The Dow industrials
<> were down 0.4 percent on Friday, while the Nasdaq was
up.
YEN GAINS
Traders said the yen remained well-bid as a relatively safe
currency due to worries about the deepening global recession.
This weighed on riskier and higher-yielding currencies,
with the Australian dollar <AUD=> touching its lowest against
the U.S. dollar since early December at $0.6420.
Investors were on the lookout for any comments from
Japanese authorities about possible currency intervention to
stem the yen's rise.
(Additional reporting by Wanfeng Zhou and Nick Olivari in
New York, and Jessica Mortimer in London; Editing by Diane
Craft)
