FOREX-Dollar hits 1-week highs, firmer tone seen fleeting

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By Meg Clothier

LONDON, Nov 28 (Reuters) - The dollar rose to one-week highs versus the euro, the yen and the Swiss franc on Wednesday, as investors took profits on the U.S. currency's recent slump to multi-year lows and thin volumes accentuated market moves. The more positive tone on the dollar was kick-started on Tuesday after news that Abu Dhabi Investment Authority was buying an equity stake in Citigroup Inc (C.N), giving confidence to investors rattled by fears of more credit market troubles as the year-end approaches.

Consequent gains in U.S. stock markets overnight [.N] attracted investors into dollar-denominated assets.

However, analysts said dollar strength was likely to be short-lived given the weak tone in U.S. economic data, prospects for further Federal Reserve interest rate cuts and the trickle of bad news from financial companies hit by the credit crunch.

"I wouldn't say this is a significant move at this stage. It is consistent with (euro/dollar) declines we've seen over the last few months -- where those declines have only lasted a few days," said Steve Barrow, currency strategist at Bear Stearns.

"I don't think this one will be any different."

The euro fell around 0.7 percent to a one-week low of $1.4724 according to Reuters data, more than two cents below record highs struck at the end of last week EUR=.

"Having got up close to $1.50 and then come off quite quickly, that's a fairly negative technical sign," Barrow added.

However, German sports car maker Porsche (PSHG_p.DE) earlier said it had extended its currency hedging period out to six years because it believed the euro could appreciate to $1.50 or even $1.60.

The dollar rose 1.1 percent versus the Swiss franc CHF= by 1151 GMT and hit one-week highs around 110.01 yen JPY=.

MORE ON CREDIT WOES

However concerns about the health of the U.S. economy and thus dollar weakness could be reignited by a weak reading from the existing home sales for October at 1500 GMT.

The Federal Reserve's beige book report -- an anecdotal summary of economic conditions nationwide -- is also due.

Fed Governor Donald Kohn speaks later in the day at the Council on Foreign Relations in New York, while Dallas Fed President Richard Fisher will speak on the regional economy.