* Dollar dips as investors book profits on its big rally
* Dollar, oil and gold reverse some of big moves
* Euro zone PMIs eyed for clues on economic outlook
By Rika Otsuka
TOKYO, Aug 21 (Reuters) - The dollar edged down on Thursday,
slipping from an eight-month high against a basket of currencies
as investors booked profits on the U.S. currency's surge this
month and oil prices pushed higher.
Persistent worries that a bailout of U.S. mortgage finance
giants Fannie Mae <FNM.N> and Freddie Mac <FRE.N> could pose
further risks to an already battered financial system also made
investors cautious on the dollar.
The dollar has soared this month as investors unwound massive
positions favouring the euro, higher-yielding currencies and
commodities that they had taken on bets that the global economy
would withstand the U.S. downturn and credit crisis.
"The dollar was dented by profit-taking following its recent
surge," said a forex trader at a big Japanese bank.
The pace of rise in the U.S. currency is seen slowing as many
investors have already slashed their euro holdings, while chart
patterns suggested the dollar was due for a brief reversal,
traders said.
A rebound in oil to above $116 a barrel <CLc1> and a rise in
gold <XAU=> also hit the U.S. currency, with market players
keeping a close eye on commodities because their tumble added
fuel to the dollar's surge.
"Higher oil is not helping the euro and sterling as much as
it could. That's an indication that market players remain bearish
about those currencies," said Minoru Shioiri, a senior manager of
forex trading at Mitsubishi UFJ Securities.
The dollar index, which measures the dollar's value against a
basket of six currencies, slipped 0.6 percent to 76.719 <.DXY>
and was off an eight-month peak reached on Tuesday.
The euro edged up 0.3 percent to $1.4783 <EUR=>, staying
above a six-month low of $1.4630 hit on trading platform EBS on
Tuesday. But the European single currency was 8 percent below a
record peak of $1.6040 hit a little over a month ago.
The dollar dipped 0.3 percent to 109.48 yen <JPY=>, having
retreated from a seven-month high of 110.67 yen hit last week.
The euro was little changed at 162.04 yen <EURJPY=R>.
Sterling rose 0.2 percent to $1.8650 <GBP=D4>, up from a
two-year trough of $1.8510 struck last week.
The dollar has soared as slowing global growth is expected to
lead to interest rate cuts by central banks outside the United
States, such as the European Central Bank, the Bank of England
and the Reserve Bank of Australia.
But the Federal Reserve is seen as more likely to raise
interest rates next year to fight inflation. Data showed on
Tuesday that U.S. producer prices jumped in July at the fastest
annual rate in 27 years, almost reaching a double-digit pace.
As the market focuses on slowing global growth, investors
will look to a string of data from Europe for clues about the
health of the euro zone and British economies later in the day.
Reports on euro zone purchasing managers indices for
manufacturing and service sectors in August and British retail
sales for July are due for release.
(Editing by Michael Watson)
