* Dollar index nears 5-month low, euro near 5-month peak
* U.S. Treasury's Geithner says financial system healing
* Portugal finmin comments on euro boost single currency
* Sterling hits 5-month high against the dollar
(Adds comment, Geithner's remarks, updates prices)
By Wanfeng Zhou
NEW YORK, May 20 (Reuters) - The dollar fell to its lowest
level in nearly five months against the euro and a basket of
currencies on Wednesday, as hopes that the worst of the global
slump may be over dented the greenback's safe-haven appeal.
Investors' appetite for risk improved following a
successful share offering from Bank of America <BAC.N> and
after U.S. Treasury Secretary Timothy Geithner said the
financial system was "starting to heal" thanks to the
government's bailout efforts. For full story, see
[]
The growing confidence in the economy bolstered assets
perceived to be riskier, such as stocks, emerging market
currencies and commodity-based units such as the Australian and
New Zealand dollars.
The market is "building on the risk appetite rally that
we've seen recently," said Joe Manimbo, a currency trader at
Travelex Global Business Payments in Washington.
"We have some encouraging news from Bank of America that
helped to boost sentiment toward the financial sector," he
said. "Treasury Secretary Geithner's comments ... also
intensified the risk rally that we've seen."
The ICE Futures' dollar index_<.DXY>, which tracks the
dollar's movements against six major currencies, to as low as
81.129, its lowest since early January. The dollar index has
lost nearly 7 percent since it hit a near one-month high last
month.
The euro surged 1.1 percent to $1.3775 <EUR=EBS>, having
climbed as high as $1.3795, according to electronic trading
platform EBS. Technical analysts say markets are now focused on
a move to $1.40. The euro was also up 0.1 percent at 130.97 yen
<EURJPY=R>.
Adding to gains in the euro were remarks from Portugal's
Finance Minister Fernando Teixeira dos Santos that a stronger
euro, which has gained more than 3 percent against the dollar
in the past month, had not been a concern among European
finance ministers. []
Michael Woolfolk, senior currency strategist at Bank of New
York Mellon in New York, said money was flowing out of
dollar-denominated deposits and going back into higher-risk
assets.
"Overall, this is still a green-shoots rally. It's evident
in crude oil above $60, it's evident in stocks and it's to some
extent being driven by animal spirits," he said.
Traders are now focusing their attention on the minutes
from the Federal Reserve's policy-setting meeting on April
28-29, due later in the day.
Against the yen, the dollar fell to as low as 94.88 yen and
last traded down 1 percent at 95.04 yen <JPY=>.
Sterling <GBP=D4> was also up sharply, rising to a
five-month peak. It last traded at $1.5685, up more than 1.4
percent on the day.
Minutes from the Bank of England's May policy-setting
meeting showed policymakers voted unanimously to keep interest
rates at a record low of 0.5 percent and extend its
quantitative easing program by 50 billion pounds, although they
discussed a bigger increase. []
