* Dollar falls vs yen, weighed down by housing news
* U.S. existing home sales fall 2.6 percent
* Focus on stable oil, soft equities
(Adds comments, updates prices)
By Wanfeng Zhou
NEW YORK, July 24 (Reuters) - The dollar dropped against
the yen on Thursday, dragged down by disappointing news in the
U.S. housing sector and steep losses on Wall Street.
But it rose to a two-week high against the euro, as the
single currency came under heavy pressure after a slew of soft
euro-zone data cooled expectations of higher interest rates.
"(The existing home sales report) just underscores that the
U.S. economy is by no means out of the woods," said Stephen
Malyon, senior currency strategist at Scotia Capital in
Toronto.
He added that "the run of strength the dollar has enjoyed
over the past several sessions is unlikely to extend...further
as the market turns its focus to the deteriorating fundamentals
backdrop in the U.S."
In midday trading in New York, the euro fell 0.2 percent on
the day to $1.5655 <EUR=>,, well below its record high of
$1.6037 set last week according to Reuters Dealing. It had
earlier slipped to $1.5637, the lowest in more than two weeks,
immediately after the German Ifo business climate report.
The Ifo report followed data showing falls in manufacturing
and service sector activity in France, Germany and the wider
euro zone. [].
Against the yen, the dollar dropped 0.3 percent to 107.62
<JPY>. Modest gains in oil prices have weighed on the dollar,
which would likely be helped by an economy-boosting decline/ .
On Thursday, U.S. crude futures rose 0.2 pct to $124.75 per
barrel <CLc1>.
The pace of existing home sales in the U.S. fell in June to
a 4.86 million-unit annual rate, the National Association of
Realtors said. Economists polled by Reuters were expecting a
drop to 4.93 million. For details, see [].
Earlier, the greenback also softened after a government
report showed initial jobless claims rose more than expected in
the latest week. For details, see []
SLUGGISH EURO ZONE
The Munich-based Ifo economic research institute said its
index of German corporate sentiment dropped to 97.5 from a
revised 101.2 in June. This was much weaker than market
expectations for a reading of 100.0 and took the index to its
lowest level since September 2005.
But given the apparent bleakness of the Ifo headline data,
the euro's losses weren't as heavy as they might have been,
analysts say.
"FX traders speculated that the reading in sentiment may
have been skewed by record high oil prices and with crude
dropping more than $20/bbl since the start of this month, Ifo
would rebound in August," said Boris Schlossberg, senior
currency strategist at DailyFX.com in New York, said in a
research note.
"Nevertheless, the news cannot be viewed as anything but
negative for the single currency," he added. "Given such
rapidly deteriorating economic conditions it is difficult to
imagine that the European Central Bank would be willing to
tighten further and risk tipping the world's largest economic
zone into a full-blown recession."
The biggest mover among the major currencies on Thursday
was sterling, which fell sharply against the euro and dollar on
the 3.9 percent fall in June UK retail sales. For more details,
see [].
The pound was last down 0.8 percent at $1.9825 <GBP=>.
The New Zealand dollar <NZD=D4> fell to a six-month low at
US$0.7404, still reeling after the Reserve Bank of New Zealand
cut its cash rate by a quarter percentage point to 8 percent.
It last traded at US$0.7409, down half a percent from late on
Wednesday.
(Additional reporting by Lucia Mutikani; editing by Richard
Satran)
