* Dollar gains as stocks fall, risk aversion returns
* Euro drops, ECB's Weber comments on "non-standard" steps
* U.S. data reinforce worries about broader economy
(Updates prices, adds comments, details)
By Nick Olivari
NEW YORK, April 15 (Reuters) - The U.S. dollar rallied on
Wednesday as falling stocks and persistent worries about the
global economy added to the greenback's safe haven allure.
The euro came under pressure after European Central Bank
Governing Council member Axel Weber said the ECB will announce
a package of "non-standard measures" to boost the euro-zone
economy in May.
Risk aversion returned to the markets after U.S. data
reinforced expectations that the economy contracted sharply in
the first quarter, while the chief executive of Wal-Mart Stores
Inc <WMT.N>, the world's largest retailer, said he still sees
no quick end to the recession.
The Federal Reserve said in its Beige Book, an anecdotal
summary of economic conditions, that the U.S. economy continued
to weaken in March and early April. For more, please see
[].
The report reinforced the trends in Wednesday's trading.
The greenback has benefited from low risk appetite in
recent sessions as investors sought shelter in
dollar-denominated assets, such as U.S. Treasuries.
"While today's FX price action is not conclusive as yet,
the moves so far are consistent with the view the 'global
recovery rally' is due for a correction," said Nick
Bennenbroek, head of currency strategy at Wells Fargo Bank in
New York.
In mid afternoon trade, the euro <EUR=> fell 0.5 percent to
$1.3193. It was down 0.3 percent against the yen at 130.67 yen
<EURJPY=>, after earlier slumping as low as 129.95 yen,
according to Reuters data.
Against the yen, the dollar <JPY=> rose 0.3 percent to
99.04 yen, well above session lows of 98.15 yen.
Concerns about the economy intensified after data showed
U.S. consumer prices posted their first 12-month drop in nearly
54 years in March and industrial production slipped further in
March. For details, see []
"We saw the first negative year-over-year (headline) print
in quite a long time. It reinforces the deflationary fears that
the Fed has been voicing," said George Davis, currency
strategist at RBC Capital Markets in Toronto. "I think it's
likely to continue seeing the dollar register some gains."
On a slightly brighter note, the New York Federal Reserve
Bank said manufacturing activity in New York state contracted
less severely in April than March's record tumble.
[]
ECB, STERLING
The ECB will lay out a package of alternative monetary
policy measures to boost the economy next month that will
stretch into next year, Weber said on Wednesday. He said the
measures will be valid for the rest of this year and into next
year. []
"Weber gives FX traders what they've been looking for,"
said Ashraf Laidi, chief market strategist at CMC Markets in
London, in a note. "Weber left no room for doubt by reasserting
inflation risks remained limited, which only further supports
the Bank's moves towards increased monetary stimulus."
Sterling was the standout performer, jumping to a high of
$1.5037 against the dollar <GBP=> as it surpassed the $1.50
mark for the first time in three months.
The British pound last traded up 0.5 percent at $1.4963.
The boost came after a report from the UK's Royal
Institution of Chartered surveyors indicated that the pace of
home price decline in England and Wales the slowest in a year
and sales volumes picked up from record low levels.
[] The provided some hope that the UK housing market
may be over the worst.
"The strong RICS survey overnight has boosted sterling. It
is higher than it was 12 months ago and people are seeing
tentative signs of green shoots in the UK housing markets,"
said State Street currency strategist Lee Ferridge.
