* Yen hits 2-month high vs dollar, 2-week high vs euro
* Weak euro-zone GDP data stokes risk aversion, dents euro
* Mildly positive U.S. data unable to ease uncertainty
(Recasts, adds comments, details, changes byline)
By Vivianne Rodrigues
NEW YORK, May 15 (Reuters) - The dollar and yen rose on
Friday as worries persisted about global economic prospects as
weak data releases in Europe prompted investors to seek shelter
in these currencies.
A batch of better-than-expected U.S. economic reports
failed to ease worries and stocks tumbled across the globe,
contrasted with weak data from the euro zone and East Europe.
Investors were mainly discouraged by reports showing the
euro-zone economy contracted at its fastest pace on record as
they remained inclined to buy the dollar and yen. Both
currencies typically rise when investors turn risk averse and
slip when risk appetite improves.
"We had some negative news coming from Europe earlier today
and overall, investors remained focused on trades involving the
dollar and the yen," said Michael Woolfolk, a senior currency
analyst at The Bank of New York Mellon. "(The) market remains
jittery."
In afternoon New York trading, the euro fell 1.1 percent to
$1.3484 <EUR=>, near session lows. The euro also was down 1.9
percent against the yen at 128.52 yen <EURJPY=> after tumbling
to a two-week low around 128.08 earlier, Reuters data show.
The single euro-zone currency was on track for its biggest
weekly loss against the yen since late January.
"Overall risk appetite is still down because of the bad
numbers from Europe," said Matthew Strauss, senior currency
strategist at RBC Capital, in Toronto.
The euro's losses were triggered earlier by data showing
the euro-zone economy shrank 2.5 percent in the first quarter
from the previous quarter and 4.6 percent from the same period
a year ago, driven by a plunge in German output. [].
"While we all know this (report) is backward-looking data,
it's first and foremost a pretty lousy health check on European
activity," said Andrew Wilkinson, senior market analyst at
Interactive Brokers, in Stamford, Connecticut. "Today's data
pulls the rug from the recent euro recovery story."
The dollar dropped 0.8 percent to 95.08 yen <JPY=>, having
hit a two-month low of 94.74 yen according to Reuters data. A
close below the 100-day moving average of 95.14 yen will be the
first in three months, according to Reuters charts.
YEN STRENGTH
Dollar/yen was also on pace for its steepest weekly decline
since late in October. Analysts said the yen's outperformance
suggests Japanese investors are looking toward their domestic
markets and that is translating into yen strength.
More positive data for the U.S. economy such as a modest
drop in industrial production for April and a rise in consumer
confidence supported U.S. equities and helped trim gains in the
dollar and yen. But these were not enough to shake the market's
bearish stance on risky trades in higher-yielding currencies
such as Australian and New Zealand dollars, which posted sharp
losses on Friday.
"The data out of the U.S. were positive for growth, but
they're second-tier reports and their impact is not likely to
be sustained," said Strauss at RBC.
The Australian dollar fell 1.4 percent to US$0.7491 <AUD=>,
while the New Zealand dollar plunged 1.9 percent to US$0.5851
<NZD=>.
Elsewhere, the Swiss franc fell to one-week lows versus the
euro, with traders saying the Bank of International Settlements
was buying the euro zone single currency. []
The euro rose to session highs at 1.5140 <EURCHF=> after
trading near the session low at 1.5009 for most of the New York
session. It was last up 0.5 percent at 1.5129 francs.
Woolfolk at the Bank of New York said there "were several
central banks" active in the markets on Friday. He added that
the bulk of the price action was focused on the euro and yen
pairs.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing
by Theodore d'Afflisio)
