* Euro up against dollar on increased risk appetite
* Dollar gains against yen
* China official lifts hopes for stimulus
(Updates prices, adds analyst comment)
By Sam Forgione
NEW YORK, March 28 The dollar edged lower
against the euro on Friday while rising against the yen on
greater investor risk appetite after comments from a Chinese
official indicated the government could implement more stimulus.
China's Premier Li Keqiang sought to reassure global
investors that Beijing was ready to support the cooling economy,
saying the government had the necessary policies in place and
would push ahead with infrastructure investment.
The comments helped push the euro up against the dollar
while weighing on the safe-haven yen. The euro tends to attract
buyers during periods of greater risk.
The increased appetite for risk also showed in a rise in the
U.S. stock market, although stocks later pared gains, led by a
decline in the biotechnology sector.
Hopes for stimulus out of China ramped up risk appetite in
the currency market, said Joseph Trevisani, chief market
strategist at WorldWideMarkets in Woodcliff Lake, New Jersey.
Traders also said they had doubts as to whether the European
Central Bank would implement further monetary easing at its
meeting on April 3, despite statements from ECB policymakers on
Tuesday hinting at the potential for more easing to prevent
A Reuters poll showed that only two of 72 economists now
predict a rate cut from the ECB at its April 3 meeting, versus
26 of 78 who did before last month's meeting.
Nevertheless, the ECB policymakers' statements weighed on
the euro this week, since the monetary easing would weaken the
A key statement on Tuesday came from ECB governing council
member and Bundesbank chief Jens Weidmann, who said negative
interest rates were an option to temper euro strength and that
quantitative easing was not out of the question.
The euro was last up 0.07 percent against the dollar,
rebounding from an earlier three-week low, to trade at $1.375.
The euro was also last up 0.71 percent against the yen at
The doubts surrounding a rate cut persisted even as German
consumer prices harmonised with other EU countries rose by 0.3
percent on the month and 0.9 percent on the year in March,
according to preliminary data from the Federal Statistics Office
Friday, which fell below a Reuters forecast.
"It's possible that the ECB surprises us and doesn't do
anything," said Marc Chandler, global head of currency strategy
at Brown Brothers Harriman in New York.
While the euro gained slightly against the dollar on the
day, it was well below its weekly high of $1.3877, which it
touched on Monday after weak U.S. manufacturing data led
investors to take profits in the dollar and favor the euro.
The dollar was last up 0.61 percent against the yen to trade
at 102.79. The dollar earlier hit a roughly two-week high
against the yen of 102.98. The U.S. dollar index, which
measures the dollar against six major currencies, was last up
0.1 percent at 80.195.
Commerce Department data released Friday showing U.S.
consumer spending rose 0.3 percent last month after a downwardly
revised gain of 0.2 percent in January supported the dollar's
gains against the yen.
(Additional reporting by Anirban Nag in London; Editing by
Sophie Hares and Chizu Nomiyama)