* Dollar lower on bullish European data
* Euro at top of ranges after strong PMI surveys
* Yen gains on Ukraine tensions
* Dollar index hits lowest in more than six months
(Updates prices, adds comments, changes byline, dateline,
By Sam Forgione
NEW YORK, May 6 The dollar slid to an eight-week
low against the euro on Tuesday on bullish European data and the
growing belief that the dollar was unresponsive to positive U.S.
economic news, while tensions in Ukraine drove demand for the
The euro was helped by strong surveys of service-sector
purchasing managers in Spain and Italy. It remains
supported by flows of capital into its southern economies, where
interest rates on government debt are still much higher than
those in the United States.
The fall in euro zone inflation halted last month and PMI
surveys of service-sector purchasing managers made for a bullish
reading on the prospects of improvement in the southern
economies most hurt by four years of turmoil over government
"PMIs are showing that Europe is coming out of the recession
that it was in," said Douglas Borthwick, managing director at
Chapdelaine Foreign Exchange in New York. "The reasons for
shorting the euro are no longer valid."
Data also showed the U.S. trade deficit narrowed in March as
exports rebounded. While the improvement was probably not enough
to help first-quarter growth, traders viewed the dollar's weak
response as another sign that the U.S. currency was immune to
positive U.S. developments.
"The market is taking the view that if the dollar can't rise
on good news, then the path of least resistance is weakness,"
said Alan Ruskin, global head of G10 FX strategy at Deutsche
Bank in New York.
Traders also cited the dollar's weakness in response to
positive U.S. jobs data last week as another sign of its failure
to rebound, as well as continued low U.S. interest rates. The
U.S. dollar index, which measures the dollar against six
major currencies, on Tuesday fell to its lowest in more than six
months to 79.06.
Traders said persistently low U.S. interest rates, which
have remained at current levels partly on the belief that the
Federal Reserve will not raise rates soon, have hurt the dollar.
"People are waiting; at a minimum they'd like to see the
Treasury market responding in orthodox fashion to stronger
data," said Ruskin of Deutsche Bank. "We haven't seen stronger
data translate into higher yields."
Ongoing clashes in Ukraine, meanwhile, drove buying in the
safe-haven yen. Pro-Russia rebels shot down a Ukrainian
helicopter in fierce fighting near the eastern town of Slaviansk
on Monday, while Kiev moved police special forces to the port
city of Odessa to stop the rebellion spreading westward.
The euro was last up 0.41 percent against the dollar
at $1.39330, while the dollar was down 0.56 percent against the
Japanese yen at 101.56. The dollar was also down 0.52
percent against the Swiss franc to trade at 0.8732
The dollar index was last down 0.47 percent at 79.109.
(Reporting by Sam Forgione, additional reporting by Patrick
Graham in London; Editing by Chizu Nomiyama)