* Dollar rises, weak U.S. jobs data raises risk aversion
* ECB holds key rate at record low 1.0 percent as expected
* China quells FX reserves speculation, supports dollar
(Adds comments, updates prices)
By Wanfeng Zhou
NEW YORK, July 2 (Reuters) - The dollar rose against major
currencies on Thursday after bleak U.S. jobs data renewed
concerns about the economy and enhanced the greenback's
safe-haven appeal.
U.S. Treasury bonds rose and stocks fell more than 2
percent after a government report showed U.S. employers cut
467,000 jobs in June, far more than expected, while the
unemployment rate rose to 9.5 percent. For details, see
[]
The data raised some risk aversion, which also pushed the
yen higher and drove down higher-yielding, commodity-linked
currencies like the Australian and New Zealand dollars.
"(The jobs data) has raised a doubt for a lot of traders in
the market about the recovery," said Kathy Lien, director of
currency research at GFT Forex in New York.
"At this point, traders and investors will probably need
some really good news before they can be convinced to buy
stocks and sell dollars once again."
In late New York trading, the ICE Futures U.S. Dollar
Index, which tracks the value of the greenback against a basket
of currencies, rose 0.8 percent to 80.269 <.DXY>.
The euro was down 1.1 percent at $1.4002 <EUR=>, retreating
from $1.4201 hit on Wednesday, its highest since early June.
"The weak jobs report reinforced a trend already in place
in the forex market prior to the release, that is, that the
dollar was oversold," said Camilla Sutton, a currency
strategist at Scotia Capital, in Toronto.
"Euro/dollar has been stuck in a range and with weak data
like today's, the euro will not get the support to break
through $1.42," she added.
Adding to pressure on the euro were comments from the
European Central Bank President Jean-Claude Trichet that
euro-zone activity would likely remain weak for the rest of the
year. The ECB left its benchmark refinancing interest rate at a
record low of 1 percent, as expected. []
The dollar slipped 0.8 percent to 95.85 yen <JPY=EBS>,
after trading as high as 96.89 yen before the jobs report.
Volume was light ahead of the three-day weekend for the
Independence Day holiday in the United States. Financial
markets will be closed on Friday and will re-open on Monday.
CHINA COMMENTS
The dollar also benefited from a Chinese Foreign Ministry
official's comments, which dampened speculation about
diversification of currency reserves. []
On Wednesday, the U.S. currency fell to a three-week low
against the euro after G8 sources told Reuters that China had
asked for a debate on proposals for a new global reserve
currency at next week's Group of Eight summit in Italy.
[]
On Thursday, Vice Foreign Minister He Yafei said it would
be "normal" for the issue to be raised at next week's meeting,
but he had not heard that Beijing had requested such a
discussion.
"The dollar has been a little bit underpinned by the
Chinese policy-makers taking back their rhetoric about the
global reserve currency," said Samarjit Shankar, director of
global foreign exchange strategy at the Bank of New York
Mellon, in Boston.
In other currency trading, the Swedish crown tumbled after
Sweden's central bank surprised markets by cutting its key repo
rate by 25 basis points to 0.25 percent on Thursday. The euro
<EURSEK=R> rose 1.6 percent on the day to 10.893 crowns,
Reuters data showed. []
The Swiss franc <EURCHF=> hit the day's low of 1.5257 per
euro from around 1.52 after a Swiss National Bank official said
the central bank was prepared to continue interventions to stem
the domestic currency's strength. []
"Central banks across the globe are becoming increasingly
more vocal about sharp gains in their currencies," said Scotia
Capital's Sutton. "Their participation in the forex markets is
likely to increase."
(Additional reporting by Vivianne Rodrigues; editing by Diane
Craft)
