* Risk appetite improves on recovery hopes, earnings
* Euro gains on euro zone PMI, German Ifo data
* Sterling stumbles on weak UK GDP figures
(Adds quotes, updates prices, changes byline)
By Wanfeng Zhou
NEW YORK, July 24 (Reuters) - The dollar fell against the
euro on Friday as figures showing a stabilizing euro zone
economy and a good week for the U.S. stock market eroded demand
for the greenback as a safe haven.
Higher-yielding, commodity-based currencies such as the
Australian and New Zealand dollars rose as investors took on
more risk. But sterling, which typically benefits from higher
risk appetite, fell after data showed the UK economy contracted
far more than expected in the second quarter.
Solid corporate earnings and U.S. housing data have boosted
optimism about the economy this week and sparked a rally in
U.S. stocks, which took the Dow industrials <> above the
9,000 level for the first time since early January on
Thursday.
"Overall, this was a very good week for sentiment," said
Ronald Simpson, managing director of global currency analysis
at Action Economics in Tampa, Florida.
"It looks like the equity market is going to hold virtually
all of its gains going into the weekend. So that's been keeping
pressure on the dollar."
In afternoon trading in New York, the euro <EUR=> rose 0.5
percent to $1.4226, after climbing as high as $1.4253, near a
seven-week high of $1.4291 hit on Thursday, according to
Reuters data.
The euro got a lift after the Ifo German business sentiment
index rose for a fourth month running to its highest level
since October 2008 [], while initial estimates showed
the euro zone services and manufacturing sectors contracted
much less sharply than expected in July [].
"We had the better economic data out of Europe, so we're
seeing positive fundamentals overall. That's helping the euro
against the dollar and supporting risk sentiment overall," said
Brian Kim, currency strategist at UBS in Stamford,
Connecticut.
SOLID EARNINGS
The ICE Futures' dollar index <.DXY>, which tracks the
greenback versus a basket of six currencies, fell 0.1 percent
to 78.740. The dollar fell 0.3 percent against the yen to 94.75
<JPY=>.
While some companies such as Microsoft Corp <MSFT.O> and
Amazon.com <AMZN.O> have posted disappointing results, earnings
for the quarter overall have been positive, which has reduced
safe-haven demand for the dollar, analysts said.
According to data by Thomson Reuters, of the 184 companies
in the S&P 500 that have reported, 77 percent have beat
analysts' estimates.
"There's going to be further downside pressure on the U.S.
dollar," said Michael Woolfolk, senior currency strategist at
the Bank of New York Mellon in New York. "We expect euro/dollar
to set new highs next week outside of any surprisingly negative
developments on the corporate earnings front."
A drop in the U.S. consumer confidence index in late July
to its lowest reading since April slightly dented risk
sentiment, but the general mood remained upbeat, analysts said.
For more, see [].
Sterling fell after official data showed UK gross domestic
product fell 0.8 percent in the three months to June and was
5.6 percent lower on the year, the steepest yearly fall since
similar records began in 1955. That was worse than forecasts
for a quarterly decline of 0.3 percent. See [].
Sterling fell 0.3 percent to $1.6441 <GBP=>, retreating
from the day's high of $1.6542, while the euro <EURGBP=> traded
0.8 percent higher at 86.52 pence.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Leslie Adler)
