* Euro gains vs dollar, pulls back from 1-year low vs yen
* Traders cover shorts in euro, high yielders
* Greece concerns limit gains
(Adds comment, details; changes byline)
By Jessica Mortimer
LONDON, Feb 26 (Reuters) - The euro rose against the dollar
and the yen on Friday, recovering from steep falls the previous
day as traders covered short positions ahead of the weekend.
Traders granted the euro a reprieve after knocking it to a
one-year low versus the yen on Thursday, although analysts said
the currency remained vulnerable due to concerns about the
fiscal health of Greece and some other euro zone countries.
At the same time, worries that the U.S. economic recovery
may not be as robust as previously thought gathered pace after
recent weak data, including rising U.S. jobless claims, falling
new home sales and a drop in consumer confidence.
"We generally expect that the euro will see more weakness
but perhaps the market is being a bit more balanced as it is
reminded that there are still challenges with the U.S. economy,"
said Carl Hammer, currency strategist at SEB.
By 1244 GMT, the euro <EUR=> was up 0.2 percent to $1.3586,
helped by a 0.4 percent rise in European shares <>.
Against the yen <EURJPY=R> the euro was 0.4 percent higher
on the day at 121.17 yen, clawing back losses after falling as
low as 119.66 yen on electronic trading platform EBS on
Thursday, its weakest since February 2009.
The euro is poised to fall roughly 2.5 percent against the
yen this week, according to Reuters charts.
"The market was caught short (on euros and higher-yielding
currencies), so it's not surprising that we're getting a
turnaround," said Ned Rumpeltin, currency strategist at Nomura
in London.
Some traders said the euro's gains were helped by its sharp
rise to a six-week high against sterling, which came under broad
selling pressure after above-forecast gross domestic product
data failed to offset deeper worries over the UK economy. []
The euro <EURGBP=D4> rose as high as 89.35 pence, its
strongest since mid-January.
The yen fell broadly, trimming gains after benefiting
earlier this week from jitters about the global economic
recovery, prompting buying of the low-yielding currency.
The dollar <JPY=> was up 0.2 percent at 89.20 yen.
FOCUS ON GREECE
Despite the euro's rise on Friday, it stayed close to a
nine-month low of $1.3443 hit a week ago and analysts expect
more losses on concerns about how Greece will service its debts,
and whether it will need support from other euro zone members.
These worries eased a little, however, after Greek budget
revenues in January exceeded expectations [],
pushing down the premium investors demand to hold Greek bonds
<GR10YT=RR> rather than benchmark German Bunds <EU10YT=RR>.
[]
Investors awaited a slew of U.S. economic data. <ECONUS>
A second reading of fourth-quarter economic growth is due
later in the day as well as a survey of manufacturing activity
in the Midwest and the Reuters/University of Michigan poll on
consumer sentiment.
A number of Federal Reserve officials will also speak on
Friday, after Chairman Ben Bernanke earlier this week said a
weak job market and tame inflation warrant low U.S. interest
rates for an extended period. []
(Additional reporting by Naomi Tajitsu, editing by Nigel
Stephenson)
