* Euro falls 0.6%, weaker PMI data hurts sentiment
* Dollar rises, may avoid 9th weekly consecutive loss
* China's yuan hits seven-month high vs dollar
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Adds details, latest prices, updates chart)
By Tommy Wilkes
LONDON, Aug 21 (Reuters) - The euro fell on Friday as an August batch of business surveys pointed to a stuttering economic recovery, while the U.S. dollar was on track to end what would be a ninth consecutive weekly decline.
Flash euro zone manufacturing and services purchasing managers index (PMI) numbers for August were worse than expected. IHS Markit's flash Composite Purchasing Managers' Index, seen as a good gauge of economic health, sank to 51.6 from July's final reading of 54.9. single currency, which had been falling before the results were released, extended losses and dropped as much as 0.6% to $1.1784 EUR=EBS , a one-week low.
"The latest flash PMI data for August in France and Germany would appear to point to a plateauing in economic activity, particularly in the services sector, where rising infection rates here could well be tempering economic activity on the margins," said Michael Hewson, analyst at CMC Markets.
The euro, which surged from under $1.12 in early July to a more than-two-year high of $1.1966 earlier this week, has been the biggest beneficiary from a dollar whacked recently by concerns about the United States' economic recovery and political squabbling over more stimulus.
With its Friday rebound the dollar was on course to escape a ninth consecutive weekly decline. Should the greenback end the week down, that would mark the longest losing streak since the summer of 2010 and a run that has only happened 5 times since 1990.
A larger-than-expected rise in weekly jobless claims in the United States and warnings from Federal Reserve officials about a recovery in hiring have raised doubts about how quickly the world's largest economy will bounce back from the coronavirus. concerns, combined with an excess supply of dollars already in circulation, are likely to weigh on the greenback in coming weeks, analysts say.
Republicans and Democrats are struggling to agree on additional stimulus to boost the economy, in contrast to the euro zone where investors have welcomed the scale of the economic packages recently launched.
The dollar index, which measures the greenback against a basket of rivals, rose as the euro fell and was last at 93.216 =USD , up 0.5%.
Commerzbank (DE:CBKG) currency analyst Ulrich Leuchtmann said that uncertainty about the dollar was undermining the greenback's safe-haven credentials.
"Everything all told: as long as the market considers the dollar to be excessively high risk a sustainable U.S. dollar recovery remains unlikely," he said.
YUAN RALLIES
The standout performer earlier on Friday was China's yuan, which in offshore markets CNH=EBS briefly hit 6.8935, its strongest since Jan. 21.
China's currency has recovered all of its losses since the Chinese city of Wuhan, where the coronavirus initially broke out, was first put on lockdown, as investors bet on a strong recovery in the country's economy.
Sterling weakened and was last down 0.6% at $1.3140 GBP=D3 . It was little changed versus the euro at 89.79 pence EURGBP=D3 .
Currency moves elsewhere were contained. The dollar fell 0.1% versus the Japanese yen to 105.67 JPY=EBS .
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