* Dollar helped by fall in oil prices
* Euro down on weak euro zone, German data
* Markets focus on G8 summit
(Updates prices, adds comments, changes byline, dateline;
previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 7 (Reuters) - The dollar gained on Monday in
quiet trading, drawing support from a retreat in oil prices
and renewed optimism after last week's U.S. jobs report that
was less bleak than many had expected.
The dollar tends to benefit from lower oil prices, which
have fallen from a peak of $145.85 <CLc1>, because the United
States is such a heavy energy consumer.
The euro also suffered from an unexpected drop in euro-zone
investor morale in July to its lowest level since June 2005.
The currency had already been hit by diminished expectations of
further European Central Bank rate hikes after Thursday's 25
basis point move to 4.25 percent.
An unexpected decline in German May industrial output also
darkened the outlook for the euro zone. For details, see
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"I think the dollar's improved tone this week is due to
several factors, one of them is still the residual effects of
the jobs data, which did not post the steep losses that the
market had priced in," said Omer Esiner, senior currency
strategist, at Ruesch International in Washington.
U.S. job losses for June totalled 62,000, broadly in line
with economists' expectations. Investors had factored in a much
worse number after a separate report showed heavier losses in
private sector employment.
"The retreat in oil prices to further below record highs
has also helped the dollar," Esiner added.
The dollar index <.DXY> climbed 0.4 percent to 73.049 after
earlier peaking at 73.151, a level last seen on June 25. The
U.S. unit pushed 0.7 percent higher to 107.57 yen <JPY=>.
SOME FOCUS ON G8
Traders are also focusing on the annual summit in Japan of
the Group of Eight industrialized nations.
G8 leaders aim to present a united front against global
inflation, driven by soaring oil and food prices, though
analysts say solving the problem will require input from
developing as well as developed countries.
Investors are also keen to see whether G8 leaders mention
this year's weakness of the U.S. dollar, although many doubt
that officials will call for concrete action.
The euro eased 0.4 percent to $1.5646 <EUR=> in early New
York trading, nearly three cents below two-month highs seen on
Thursday before the ECB decision.
After the widely-expected rate hike on Thursday, ECB
President Jean-Claude Trichet said he had no bias on further
policy moves, prompting markets to trim bets for more policy
tightening.
"The pendulum of expectations is in the process of swinging
further away from ECB rate hikes. Currently expectations for a
series of ECB hikes have been scaled back since the ECB
meeting," said Brown Brothers Harriman in New York.
Near-term, analysts said the euro could come under further
pressure.
One of the major movers on the day was sterling <GBP=>,
which fell 0.8 percent to $1.9670 after news that British
industrial output fell more than expected in May, highlighting
the twin threats of a sharply slowing economy and rising
inflation.
No major U.S. data are due on Monday, but San Francisco Fed
President Janet Yellen will speak later in the day.
Fed Chairman Ben Bernanke will speak at a Federal Deposit
Insurance Corp forum on Tuesday, and give testimony before the
House Financial Services committee on Thursday, although he is
expected to confine his comments to financial market
regulation.
(Additional reporting by Ian Chua in London; Editing by Tom
Hals)
