* China says Europe remains key market
* High-risk currencies gain as stocks, commodities climb
* U.S. jobless claims fall, U.S. Q1 GDP revised down
(Adds quotes, updates prices, changes byline)
By Wanfeng Zhou
NEW YORK, May 27 (Reuters) - The euro jumped across the
board on Thursday after China said Europe remains a key
investment market for its foreign-exchange reserves while a
global stocks rally buoyed risk appetite.
China's central bank said a Financial Times report that
Beijing was concerned about its euro zone bond holdings was
groundless. The report had driven the euro to a near four-year
low against the dollar earlier in the global session. For more,
see []
Strong gains in European <> and U.S. shares <.SPX>
also helped support the euro, while the yen came under broad
pressure as investors put on riskier bets funded by cheap
borrowing in the Japanese currency.
"In general, we're seeing an unraveling of yesterday's
action," said Tim O'Sullivan, chief dealer at Forex.com in
Bedminster, New Jersey.
"We're following the equity markets. The dollar/yen started
to gain some traction ... and that's dragging the whole risk
trade up, which is giving another boost to the euro," he said.
In afternoon New York trading, the euro <EUR=EBS> traded
1.8 percent higher at $1.2395, having earlier climbed as high
as $1.2395, according to electronic trading platform EBS.
Kuwait Investment Authority on Thursday also denied a media
report that it is reducing its exposure to euro zone
investments and affirmed it is a long-term investor in Europe.
[]
Meanwhile, South Korea's central bank said it has no plans
to reduce euro assets in its foreign reserves, the world's
sixth-largest.
Analysts said the comments from China and Kuwait prompted
investors to cover short positions in the euro, which has taken
a beating the last few months.
"A lot of this euro rally is due to short-covering given a
'risk on' environment. This is also a relief rally on the back
of the Chinese story," said Boris Schlossberg, director of FX
research at GFT in New York.
"It's not because investors are more upbeat about the
future. I think they are relieved things are not getting any
worse and there are no exogenous shocks out there for the time
being," he added.
The euro rallied 3.1 percent against the yen to 112.63 yen
<EURJPY=R>, pulling away from an 8-1/2-year low of 108.83 yen
hit this week.
The dollar <JPY=> rose 1.1 percent to 90.88 yen.
Thin volume conditions ahead of market holidays in Britain
and the United States on Monday exacerbated the moves, traders
said.
Appetite for risk was also supported by the view that
European officials are now taking the right steps to address
the regions' debt problems, analysts said.
"The Portuguese debt auction yesterday went well, while the
Spanish parliament approved a 15-billion-euro austerity
package," said David Watt, senior currency strategist, at RBC
Capital Markets in Toronto.
"So we're starting to see some progress in the euro zone
and things are getting done. Given that the market is
excessively short euros, the general sentiment is that this
selling is overdone, and therefore the euro is due for a
bounce," Watt added.
Higher-yielding, commodity currencies soared as oil prices
climbed. The Australian dollar <AUD=D4> rose 3.5 percent
against its U.S. counterpart to US$0.8497 and jumped 4.6
percent versus the yen <AUDJPY=R> to 77.20 yen.
(For the Spanish austerity story, double-click on
[])
