FOREX-U.S. dollar slides as rising stocks dim safety luster
* Dollar down as global shares rise
* China exports slump, a reminder of global uncertainty
* Sterling pressured as quantitative easing kicks off
* Some analysts see further legs in euro strength (Adds quotes, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 11 (Reuters) - The dollar weakened broadly on Wednesday as investors felt more comfortable buying risky assets such as stocks, modestly dampening the greenback's safe-haven appeal.
European shares rose .FTEU3, with banks leading the way as U.S. stocks edged up, although gains were pared as hopes faded for new details on a government plan to shore up the banking system.
"U.S. stocks are doing better today and we're seeing the euro getting some bids, although equities are a little disappointing considering where stock futures were at the open," said Steven Butler, director of currency trading at Scotia Capital in Toronto.
Gains in emerging market units such as the Hungarian forint and Polish zloty versus the dollar also weighed on the U.S. currency, analysts said.
In midday New York trading, the euro rose 0.9 percent to $1.2782 EUR=, after touching a two-week high of $1.2823 on trading platform EBS on Tuesday.
John Crooks, president of research firm Black Swan Capital in Florida, said he thinks the euro bounce could have some legs. Apart from the rally in stocks, he said, the euro was being supported by two other factors: "bond prices under pressure and oil back in the mid-40s despite no real sign that global demand has picked up."
The dollar was down 1.1 percent against the yen at 97.56 yen JPY=. Against the Swiss franc, the dollar fell 0.3 percent to 1.1576 francs CHF=, while the Australian and New Zealand dollars rose sharply against the greenback to US$0.6503 AUD= and US$0.5062 NZD=, respectively.
The dollar fell 0.6 percent on the day against a basket of six major currencies to 88.033 .DXY.
Some analysts said the euro's gains could be limited as markets got a timely reminder of the sickly state of global economic growth after data earlier in the global session showed a slump in economic powerhouse China's exports in February. [ID:nPEK194920].
"The dramatic deterioration in China's trade balance suggests that caution remains recommended and a lasting reversal in the dollar trend is unlikely,' said Commerzbank in a research note.
Boris Schlossberg, GFT's director of FX research, said the Chinese trade report cast doubts on China's ability to finance the U.S. current account deficit and in the long run could weigh on the dollar.
"The concern is that maybe China will not be able to generate massive amounts of foreign exchange capital which can then be recycled to U.S. Treasury securities. That is the big fear factor that hangs over the dollar."
Sterling, meanwhile, stayed under pressure against the single European currency, which rose to six-week highs above 93 pence, as Britain officially started its quantitative easing program to boost money supply.
The pound hit a six-week low against the dollar at $1.3658 GBP=. It last traded at $1.3780, up 0.2 percent on the day. The euro was up 0.6 percent versus sterling at 92.70 pence EURGBP=. (Editing by Leslie Adler)
