* Dollar gains 5 pct versus euro this month
* NY Fed manufacturing index unexpectedly rises
* Consumer confidence index edges up
* Contraction in Europe, Japan cited
(Adds comments, updates prices)
By Vivianne Rodrigues
NEW YORK, Aug 15 (Reuters) - The U.S. dollar jumped to
a six-month high against the euro on Friday amid signs the
U.S. economic slowdown may be bottoming while growth in the
euro zone stalls.
The dollar has rallied more than 5 percent against the
euro this month as investors shifted their view on the
global economy's ability to withstand a downturn initiated
in the United States.
Data in the United States on Friday showed an
unexpected rise in manufacturing activity in the New York
state area and an increase in industrial output and
consumer confidence.
Meanwhile, reports on Thursday showed the euro zone
economy contracted in the second quarter for the first time
since the common currency's inception.
A steep drop in commodity prices also has lent support
to the dollar.
"We are clearly seeing position adjustment on the
dollar that pretty much continues," said Vassili
Serebriakov, a currency strategist at Wells Fargo Bank in
New York. "A lot of the dollar shorts have been taken off
the table by now.
"The (U.S.) data has not been outstanding, but it has
been positive enough not to stand in the way of those
dollar gains," he said.
In midday trading in New York, the euro was down 0.8
percent on the day at $1.4690 <EUR=>, its lowest since
February, according to Reuters data.
The dollar index <.DXY>, which measures the value of
the greenback against a basket of six currencies, struck a
seven-month high of 77.252.
It also reached a 7-1/2 month high of 110.66 yen
<JPY=>, and the dollar's rally knocked an already
floundering sterling to two-year lows near $1.85 <GBP=>.
The Bank of England this week warned of economic
slowdown ahead and Japan said its economy contracted in the
second quarter at the sharpest rate in seven years.
"It's not just the U.S. economy that has problems now,
it's clearly spilling over to the rest of the world. We saw
this yesterday with GDP numbers in Europe ... no one
believes the European Central Bank is going to tighten any
more and they're moving to price in a rate cut," said
Martin McMahon, FX strategist at Credit Suisse in Zurich.
Goldman Sachs on Thursday said it was time to let go of
its 10-year dollar bearish stance, revising its forecast
for several U.S. dollar pairings. It now sees the euro
falling to $1.45 in three months. The euro should drop
further to $1.40 over the next 12 months, the bank said.
Dollar buying momentum has also been bolstered recently
by the ongoing conflict between Russia and Georgia, as
investors have favored the U.S. currency while a peace-deal
is awaited.
COMMODITIES DROP
Crude oil <CLc1> has fallen more than 20 percent from
the all-time high above $147 set in July, while the
Reuters-Jeffries/CRB index <.CRB>, a global index of
commodity prices, has slid almost 18 percent from its July
peak.
"People have been selling commodities that they funded
out of dollars, so they've been needing to cover their
commodity positions by buying dollars and that's generated
a broad dollar rally," said Chris Turner, head of FX
strategy at ING.
Crude oil prices slid further on Friday and were last
trading 2.2 percent lower at $112.50 per barrel.
On the data front, the Reuters/University of Michigan
Surveys of Consumers said its index of consumer confidence
edged up to 61.7 in early August from 61.2 in late July.
For details, see []
"We see the dollar's climb motivated by a desire to
sell currencies where the domestic economy risks a rapid
deceleration," strategists at Morgan Stanley said in a
note. "But until the U.S. economy's growth prospects
brighten, we think additional dollar gains will be fueled
by covering outstanding dollar shorts."
Other reports showed U.S. industrial production edged
up 0.2 percent in July and a gauge of manufacturing in New
York state rose by a surprising amount in August.
(Additional reporting by Lucia Mutikani in New York, Ian
Chua in London; Editing by Daniel Trotta)
