* Euro falls to $1.4028, lowest since late July
* Dollar buying momentum gains, .DXY hits 4 1/2-mth high
* Spreads widen on Greek, Spanish and Portuguese bonds
By Naomi Tajitsu
LONDON, Jan 21 (Reuters) - The euro hit its weakest against
the dollar in nearly six months on Thursday, stung by concerns
over Greece and other peripheral euro zone countries, while a
recent breach of key technical levels added to selling momentum.
Ongoing weakness in the single European currency prompted a
broad rise in the dollar, which extended this week's winning
streak and hit a 4-1/2-month high against a currency basket.
The Australian dollar slipped as robust Chinese growth and
higher inflation data raised speculation of further monetary
tightening, which could hurt commodity-linked currencies.
Analysts said the U.S. currency benefited from a slide in
global share prices and the dollar index's vault above its
200-day moving average on Thursday.
The euro dropped under its 200-day moving average against
the dollar on Wednesday for the first time since May 2009.
Analysts said this suggested it may be prone to more weakness.
"We see positive momentum in the dollar continuing due to
risk appetite and problems related to the euro zone," said
Kasper Kirkegaard, currency strategist at Danske in Copenhagen.
"That momentum has increased after technical levels were
breached, which is supporting the dollar."
The euro fell 0.5 percent on the day to $1.4028 according
to Reuters data, its lowest since late July. By 1126 GMT, it was
at $1.4040. Option barriers were seen at $1.4000, traders said.
The dollar index <.DXY> rose to 78.814, its highest since
early September, and pushed above its 200-day moving average at
78.515 for the first time since May last year.
These gains helped to push the dollar up broadly, taking it
to its highest in roughly a month against the Swiss franc and
the Canadian and New Zealand currencies.
CHINA DATA
Worries over the fiscal health of some heavily-indebted euro
zone states prompted investors to sell government bonds of
Greece, Spain and Portugal in favour of benchmark German paper.
[]
For a graphic on the euro and Greek bond spreads, click on
http://graphics.thomsonreuters.com/0110/EZ_EURGR0110.gif
The euro was also under pressure after a flash reading of the
composite Purchasing Managers' Index for January fell to 53.6
from 54.2 the previous month and below forecasts of 54.5,
indicating slower expansion. []
"January's fall in the euro zone composite PMI suggests that
the recovery might be losing momentum," said Jennifer McKeown,
economist at Capital Economics.
China's annual gross domestic product expanded 10.7 percent
in the fourth quarter, while third quarter growth was revised up
to 9.1 percent. Growth for the year was 8.7 percent, surpassing
Beijing's 8.0 percent target. []
That raised speculation of further tightening after recent
steps by China's central bank to rein in liquidity. On Thursday,
it guided rates on 3-month bills higher.
China is Australia's top trading partner, making the Aussie
sensitive to growth expectations for China.
The Australian dollar slipped 0.1 percent to $0.9080 after
<AUD=D4>, after falling some 1.8 percent the previous day. It
was up 0.4 percent against the yen at 83.35 yen <AUDJPY=R>,
having earlier fallen below 83 yen.
Broad yen weakness pushed the dollar 0.6 percent higher to
to 91.85 yen <JPY=>.
Traders will watch earning results [] from Goldman
Sachs <GS.N> and Google <GOOG.0>. Weekly U.S. jobless claims and
the Philadelphia Federal Reserve's survey on factory activity
are also due out later in the day.
(Additional reporting by Tamawa Desai, editing by Mike Peacock)
