* Yen and euro weakened by gains in stocks
* Oil dips after big gains on Tuesday
(Updates prices, adds comment, changes byline, dateline;
previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 13 (Reuters) - The dollar climbed to a
two-week peak against the euro on Wednesday, as gains in global
stock markets and improved data out of China drew investors into
riskier bets than low-yielding currencies in Europe and Japan.
The euro and yen have gained strongly against the dollar in
recent weeks as investors sought traditional safe havens for
their money on a darkening outlook for banks and economic
growth, underlined again by downgraded forecasts from the
International Monetary on Tuesday.
Softer-than-expected U.S. producer prices and retail sales
numbers last month briefly pushed the dollar lower, but
Wednesday's dollar uptrend remained intact.
"The weak retail sales and PPI (producer price index) data
had virtually no impact on the dollar, and it's probably because
that there are portfolio flows going into U.S. equities," said
Sebastien Galy, currency strategist at Deutsche Bank (DE:DBKGn) in New
York. "This is giving the dollar a bit of a bid."
Still the outlook for the dollar stayed weak. After gaining
steadily for 1-1/2 years amid U.S. interest rate hike
expectations, the dollar has hit a wall and many in the market
believes that the greenback's long-term rally is near its end.
Expectations of a deal to stabilize oil output, and what
seems like a bottoming out of expectations for U.S. interest
rate rises, have also helped the dollar. It rose 0.5 percent to
109.08 yen JPY= , up from lows of 107.61 hit on Monday.
"The expectation for Fed rate hikes is incredibly low," said
Deutsche's Galy. "It doesn't take much to push them higher."
The euro fell 0.9 percent against the dollar to $1.1278
EUR= . It fell as low as $1.1274, a two-week low.
"Obviously when sentiment is better and (interest rate)
carry trades are put in place you should see the euro and yen
weaken," said Sanjiv Shah, Chief Investment Officer with
London-based Sun Global Investments.
"The yen may weaken from here. But whether that translates
into dollar strength I don't know. We have just started the
results season and it is looking like quite a bad quarter. The
futures market does not believe that there will be more than one
rise in U.S. rates this year."
On the day, oil was down more than 1 percent and the boost
for commodity-reliant currencies from Tuesday's jump faded in
morning trade in Europe. The Norwegian crown NOK= and
Australian dollar AUD= .
Crude, however, remains well above $40 a barrel, which has
allowed all three currencies to recover from long-term lows hit
in January.
The dollar index was up 0.8 percent at 94.705 .DXY ,
gaining for the first time in four days.