* Upside surprise in German, French GDP buoys euro
* U.S. retail sales and jobless claims data disappoint
* Euro zone economy shrinks just 0.1 pct in 2nd quarter
(Updates prices, adds comment, detail, changes byline)
By Steven C. Johnson
NEW YORK, Aug 13 (Reuters) - The euro rose against the
dollar for the second straight session on Thursday as data
showed the euro zone's two biggest economies unexpectedly
returned to growth in the second quarter of the year.
News that Germany and France pulled out of recession in the
April-to-June period contrasted with disappointing U.S. retail
sales data for July, which cast a shadow over an anticipated
consumer rebound. That weakened the dollar, which also fell 1
percent against the Japanese yen.
The retail sales report, and figures showing a surprise
jump in the number of U.S. workers filing first-time jobless
claims last week, came a day after the Federal Reserve gave its
clearest signal yet that it saw the U.S. recession nearing an
end.
"The (European) data definitely cased a rethink of what to
expect from the euro zone and are jumping all over the euro,"
said Andrew Wilkinson, senior market analyst at Interactive
Brokers Group in Greenwich, Connecticut.
He said markets also expect the U.S. economy to recover but
said the Thursday data was a reminder that "U.S. consumers are
still looking at a massive debt burden that won't go away
soon," suggesting a "slow and protracted" recovery.
The euro was last up 0.7 percent at $1.4300 <EUR=> after
earlier rising to $1.4327, its highest level in a week,
according to Reuters data.
The dollar fell 1 percent to 95.13 yen <JPY=>, giving up
its earlier gains after the U.S. data, while the euro fell 0.3
percent to 135.98 yen <EURJPY=R>. Sterling rose 0.6 percent to
$1.6580 <GBP=>.
Analysts said the euro-zone forecast was not uniformly
sunny, noting the economy of the 16-country zone shrank 4.6
percent from a year ago. It also contracted 0.1 percent in the
second quarter after shrinking 2.5 percent in the
January-to-March period.
While Wilkinson said the French and German data may prompt
some investors to look for upward growth revisions for this
year and next, he added that the euro has to break above
$1.4350 Thursday to convince investors its rally is for real.
None of that dulled investor disappointment with the 0.1
percent slide in U.S .retail sales, especially as it followed
the Fed's upbeat assessment and last week's data showing U.S.
employers cut fewer jobs than expected in July.
Economists polled by Reuters had expected retail sales to
rise 0.7 percent in July, partly thanks to a boost from the
government's "cash for clunkers" program that gives consumers
money to swap aging gas-guzzling cars for new, more efficient
ones.
"The decline in the headline number for retail sales,
despite much talk of the 'cash for clunkers' program, came as a
big disappointment," said Matthew Strauss, senior currency
strategist at RBC Capital Markets in Toronto. "I'm not
surprised to see the dollar giving up its earlier gains versus
the yen as investors are flocking to the Japanese currency as a
safe haven." For more on the U.S. data, see []
Higher-yielding currencies such as the Australian and New
Zealand dollars gained more than 1 percent each, extending
rises from the previous day.
Some investors said even the Fed this week had left a lot
open to interpretation.
"The problem with Fed statement is that the market can read
into it what it wants, leaving both sides content," said Stuart
Bennett, senior FX strategist at Calyon in London. "Hence, for
now, it is still unclear which way the dollar will jump,"
(Additional reporting by Nick Olivari and Vivianne Rodrigues
in New York and Naomi Tajitsu in London; Editing by Padraic
Cassidy)
