* Dollar hits year's low vs euro, currency basket
* Stock gains suggests improvement in risk appetite
* Data from U.S., China and Europe add to optimism
* General Motors files for bankruptcy
(Recasts, updates prices)
By Nick Olivari
NEW YORK, June 1 (Reuters) - The dollar fell broadly on
Monday, tumbling to its lowest so far this year against both a
basket of currencies and the euro, as optimism that the global
economy is on the road to recovery boosted riskier assets.
Commodity-related currencies including the Australian and
New Zealand dollars, which are considered to be higher risk,
performed particularly well, hitting 8-month highs against
their U.S counterpart as oil prices <CLc1> jumped and U.S.
stocks rose <.SPX>.
The dollar pared some losses after a key measure of U.S.
inflation rose more than expected and U.S. manufacturing data
showed a slower contraction, but that failed to derail the
day's overall trend. For more see [] and
[].
"Generally, this is still a case of better-than-expected
data not necessarily good for the U.S. dollar," said Shaun
Osborne, chief currency strategist at TD Securities in Toronto.
"We expect no rebound in sight for the dollar just yet."
In midmorning New York trade, the dollar index <.DXY> was
down 0.2 percent at 79.045, having hit its lowest since
mid-December at 78.586 earlier in the global session.
The euro gained 0.2 percent on the day to $1.4178 <EUR=>,
having rallied as high as around $1.4246, its strongest since
late December.
Among perceived higher risk currencies, sterling rose to
its highest in seven months against the dollar at $1.6436
<GBP=D4>, while the Australian and New Zealand dollars hit
eight-month highs of $0.8137 <AUD=D4> and $0.6520 <NZD=D4>
respectively.
"This is a market that is in the process of selling the
dollar against everything, buying commodities, and that should
continue today," said Brian Dolan, chief currency strategist at
Forex.com, Bedminster, New Jersey. "The move has taken on
something of a self-fulfilling quality to it now."
The dollar did manage gains against the yen, climbing 1.1
percent to 96.31 yen <JPY=>. The yen is considered to have the
least risk of all currencies and will fall against all
currencies as risk tolerance rises.
EURO AND UK
Adding to optimism that the global economy may be over the
worst of the recession, the final euro zone PMI manufacturing
index climbed to a seven-month high of 40.7 in May, up from the
provisional estimate of 40.5. []
The UK manufacturing PMI was also stronger than expected,
showing the slowest contraction in the sector in a year.
[]
Earlier the Chinese PMI came in at 53.1 in May, and while
this marked a fall from 53.5 in April, it was the third month
in a row that the reading has been above the 50 level that
separates expansion from contraction. []
General Motors Corp <GM.N> filed for bankruptcy as
expected, removing some uncertainty about the ailing U.S. auto
industry. This helped risk appetite and weighed on the dollar.
[]
Some analysts said the U.S. government's pledge of an
additional $30 billion to rescue GM had inflamed long-running
concerns about how Washington will fund its plans to help the
struggling economy.
(Additional reporting by Steven C. Johnson in New York and
Naomi Tajitsu in London; Editing by James Dalgleish)
