(Corrects 3rd para to fall, not rise, in German unemployment)
* Dollar index down 0.4 pct at 79.314 <.DXY>
* Dlr falls as firmer equity markets lift risk sentiment
* Euro zone economic sentiment improves in July
* Euro, higher risk FX recover; Mkt awaits Fri US GDP data
By Jessica Mortimer
LONDON, July 30 (Reuters) - The dollar fell broadly on
Thursday as firmer equity markets helped the euro and perceived
higher risk currencies to recoup some of the previous day's
sharp losses.
European stocks suggested risk appetite was healthy, with the
FTSEurofirst 300 index <> gaining 1.2 percent, while U.S.
S&P 500 futures <SPc1> rose by 0.7 percent.
The euro was also helped higher by data showing an
improvement in euro zone economic sentiment in July, as well as
an unexpected fall in German unemployment, which were seen as an
encouraging sign for the region's recovery prospects.
[] [].
Its gains were limited, however, with trade relatively quiet
as many investors stayed on the sidelines ahead of key U.S.
gross domestic product data for the second quarter on Friday.
"We are seeing a bit of a bounce today after the dollar's
gains yesterday, but I don't see currencies moving much further
than this ahead of tomorrow's U.S. GDP data," said nabCapital
currency strategist Gavin Friend.
At 1132 GMT, the dollar index, a gauge of the greenback's
performance against six other major currencies, fell 0.4 percent
to 79.314 <.DXY>. It hit a seven-month low of 78.315 on Tuesday
before staging a strong rebound on Wednesday.
The euro was at $1.4059 against the dollar <EUR=>, up 0.2
percent on the day. It had slid to $1.4007 on trading platform
EBS on Wednesday, the lowest since July 15, after rising to
$1.4305 the day before.
COMMODITY FX RECOVER
Perceived higher risk and commodity-linked currencies such
as the Australian and Canadian dollars recovered some of the
losses suffered on Wednesday, with sentiment buoyed by gains in
Chinese shares and a recovery in oil prices <CLc1>.
China's benchmark Shanghai Composite Index <> ended 1.7
percent higher, recapturing some of the previous day's
five-percent loss after a senior central banker reiterated loose
monetary policies would not be reversed.
"There is a general bid tone to high yielders such as the
Australian dollar," said Christian Lawrence, currency strategist
at RBC Capital Markets, also pointing to rises in U.S. stock
market futures.
"The Chinese stock market is almost acting as a leading
indicator for U.S. markets," he added.
The Australian dollar gained 1 percent to $0.8248 <AUD=>
after steep falls on Wednesday. The U.S. dollar meanwhile fell
0.6 pct against the Canadian dollar to C$1.0844 <CAD=>.
The New Zealand dollar also rose, but underperformed other
commodity-linked currencies after its central bank kept interest
rates at a record low of 2.5 percent but left the door open to
further cuts while warning that a strong currency was adding to
the risks to an economic recovery. [].
The kiwi was last trading up 0.2 percent at $0.6524
<NZD=D4>.
Elsewhere, a survey by Nationwide showing UK house prices
rose 1.3 percent this month boosted sterling, which rose 0.7
percent against the dollar <GBP=> to $1.6484 and hit a four-week
high against the euro <EURGBP=>. [].
Market players will keep an eye on the U.S. Treasury's
record $28 billion sale of seven-year notes later in the day,
following a tepid reception, especially from foreign investors,
to auctions of two- and five-year paper earlier in the week.
The key focus for the week, however, is on the U.S. GDP data
for clues on the extent to which the world's largest economy is
recovering from a deep downturn.
The economy is forecast to have contracted by 1.50 percent
in the second quarter after a fall of 5.5 percent in the first
quarter. <ECON>.
(Additional reporting by Nick Vinocur and Tamawa Desai in
London; editing by Stephen Nisbet)
