* Higher-yielding currencies slip on shaky risk appetite
* Euro dips to session low on German ZEW, then recovers
* Sterling underperforms on expectations of more BoE QE
* Focus on U.S. data later in the session
(Adds details, updates prices)
By Emelia Sithole-Matarise
LONDON, Sept 15 (Reuters) - The dollar rose broadly against
a basket of major currencies on Tuesday as European shares
stumbled, cooling risk appetite and propping up demand for the
safety of the greenback.
Sterling underperformed after Bank of England Governor
Mervyn King said the central bank was looking at reducing the
rate on commercial banks' reserves, fuelling speculation of
further quantitative easing. []
The dollar index, which measures the dollar's value against
a basket of currencies, rose 0.1 percent to 76.81 <.DXY>,
staying above a one-year low of 76.457 hit last week. European
equities fell 0.3 percent and U.S. stock futures slipped.
"The dollar is trading in its usual role as a safe haven
asset," said Christian Lawrence, currency strategist at RBC
Capital Markets in London.
"The European bourses are all lower, we are seeing S&P and
Dow Jones stock futures pointing to a slight fall in U.S.
equities. As a result we are seeing an appreciation of the
dollar pretty much across the board."
The biggest moves were in cable, with sterling falling 0.5
percent on the day to $1.6484 <GBP=D4> by 1115 GMT after King's
comments which fuelled speculation that the BoE may use yet
another device in its quantitative easing toolkit.
The pound erased earlier gains made against the dollar after
stronger than expected British house prices and a
smaller-than-expected fall in inflation.
Sterling also hit a four-month low versus the euro on King's
comments.
The euro fell to a session low against the dollar of $1.4579
<EUR=> after Germany's ZEW survey showed investor sentiment had
risen less than expected in September.
The think tank's economic sentiment index rose to 57.7 from
56.1 in August, but below forecasts of 60.0. An index on current
conditions improved to -74.0 from -77.2. Economists had forecast
a reading of -68.0. []
The euro was last at $1.4607, down 0.1 percent on the day.
Traders also cited options worth some 2 billion euros set to
expire with a strike price of $1.4560.
Against the yen, the dollar rose 0.2 percent at 91.13 yen
<JPY=>, pulling away from a seven-month low of 90.18 yen hit on
trading platform EBS on Monday.
US RETAIL SALES KEY
Market players were waiting for U.S. retail sales data for
August, expected to show a 2.0 percent rise after a 0.1 percent
decline in July, and the New York Federal Reserve's "Empire
State" September manufacturing figures due later.
"What will dictate where we go in terms of dollar/yen and
potentially more broadly for the dollar is how the data pans out
in the United States," said Derek Halpenny, European head of
global currency research at Bank of Tokyo Mitsubishi-UFJ.
"We should have a clear picture in terms of Q3 GDP by the
end of this week. That will potentially dictate movements in
yields at the short end of the curve and potentially offer some
support for the dollar," he said.
Meanwhile, the Australian dollar erased earlier losses after
minutes of the Reserve Bank of Australia's last policy meeting
gave little guidance to markets on when the cash rate would be
raised from its record low of 3 percent. []
The Australian dollar stood at $0.8591 <AUD=D4>, down 0.3
percent on the day.
The dollar reversed earlier losses versus the Swiss franc to
gain 0.2 percent to 1.0368 francs after industrial orders fell
17.5 percent in the second quarter compared with a 17.6 percent
fall in the year-ago quarter.
A steady drop in Treasury yields in recent weeks surprised
many and triggered speculation the U.S. dollar was fast becoming
the preferred funding currency for carry trades.
(Additional reporting by Tamawa Desai; editing by Elizabeth
Piper)
