* Euro <EUR=> rises 1 pct vs dlr <EUR=> as equities gain
* Rally is risk-driven; Aussie/dlr hits 1-month high
* Obama fiscal stimulus plans could undermine dollar
(Adds quote, details, updates prices)
By Neal Armstrong
LONDON, June 14 (Reuters) - The euro rose on Monday as an
improvement in sentiment towards riskier assets hit the dollar
and prompted a bout of short-covering in the single European
currency, lifting it further away from a recent four-year low.
European equity markets gained sharply, following rises in
Asia. U.S. stock futures were 0.7 percent higher <SPc2>.
"The dollar was softer overnight against the euro as steady
sentiment helped risk currencies recover further," said Geoffrey
Yu, currency strategist at UBS.
"Equity markets globally performed solidly, especially on
the back of expectations that policy will remain relatively
loose for an extended period globally."
By 1115 GMT, the euro <EUR=> rose around 1 percent versus
the dollar at $1.2231, after hitting the day's high of $1.2258,
according to Reuters data. European equities <> were up 0.8
percent at midday trade.
But analysts said the recovery in the euro was unlikely to
push it out of its downtrend, as the structural problems in the
euro zone which have plagued the currency had not altered.
"We've seen a good session for equities. This looks to be a
pro-risk move, driven by the higher-yielding currencies such as
the Aussie. Fundamentally, nothing has changed for the euro,"
said Kenneth Broux, market economist at Lloyds Banking Group.
Traders said hedge funds had been seen cutting short
positions on a break of $1.2150/60 in Asia and then through
$1.2220 in Europe.
Technical analysts were looking for a close above the 21-day
moving average at $1.2234 for the first time since mid-April.
Additional resistance levels were highlighted at $1.2330 and
$1.2445, the 2008 and 2009 lows.
The euro has lost 15 percent against the dollar this year
but gained 1.6 percent last week as it pulled up from a trough
of $1.1876, its lowest since around March 2006.
Some said risk appetite was also supported by comments from
policymakers, including St. Louis Federal Reserve Bank President
James Bullard who said a strong global economic recovery was
underway [].
EURO SHORTS BOOSTED
Commodity Futures Trading Commission data showed speculators
boosted their bets against the euro in the week ended June 8,
although net short positions were below record levels. []
"The positioning is not extreme but there is room for a
rebound in the euro from here. Our one-month forecast is for a
move to $1.25 but after that we expect it to go down," said
Derek Halpenny, European head of currency research at BTM-UFJ.
The Australian dollar gained around 1 percent versus the
dollar <AUD=D4> to trade above $0.8600, its highest in a month.
The Aussie also gained more than a percent on the
low-yielding yen, which was soft across the board, to 78.99 yen
<AUDJPY=R>, touching its highest in nearly four weeks.
The euro rose 1.4 percent to trade above 112 yen for the
first time in a week. The rise in the yen crosses allowed the
dollar to make a brief show above 92 yen <JPY=>.
The dollar was down more than 1 percent versus a currency
basket <.DXY> at 86.446. Analysts said the greenback could be
undermined by U.S. President Barack Obama and his aides calling
for more stimulus to support the economy. []
Sterling was given a boost as the UK's newly created Office
for Budget Responsibility said it expected government borrowing
to fall slightly faster than originally thought. []
The pound was up 1.2 percent versus the dollar <GBP=D4> at
$1.4718 and outpaced the euro slightly to trade at 83.02 pence.
(Additional reporting by Tamawa Desai; editing by Nigel
Stephenson)
