FOREX-Dollar up on Fed view, US sales data awaited

(Changes byline, adds quotes, updates prices)

By Simon Falush

LONDON, May 13 (Reuters) - The dollar rose broadly on Tuesday as some investors speculated that the Federal Reserve may be nearing the end of its rate cutting cycle, while a fall in stock prices cranked up risk aversion, supporting the yen.

Traders awaited U.S. retail sales figures due at 1230 GMT for more clues about the Fed's policy outlook.

Some believe the U.S. central bank will pause its easing campaign after slashing borrowing costs by 325 basis points since September to 2 percent.

The data are expected to show a dip of 0.1 percent in retail sales in April due to a big drop in auto sales. Excluding autos, sales are forecast to rise 0.2 percent, slightly more than in March.

Doubts remain however on whether the U.S. government and Federal Reserve have done enough to get the U.S. economy back on track. The sales data due could reflect that, analysts said.

"I'm still looking for softer U.S. economic data, I'm waiting for the numbers to catch up with people's view that there is a recession in the U.S. in the first half of the year," said Niels Christensen, currency strategist at Nordea in Copenhagen.

The euro was down 0.5 percent at $1.5461 EUR= by 1043 GMT. Against a basket of currencies the dollar was up 0.4 percent at 73.233 .DXY.

Sentiment on Europe was dented by a rights issue at Credit Agricole due to further writedowns, high British inflation and further signs of weakness in the British housing market, which helped to drag stocks half a percent lower .FTEU3.

"Data out of the UK was very negative ... and equities have turned into negative territory and that's why yen crosses are down," said Michael Klawitter, currency strategist at Dresdner Kleinwort in Franfurt.

The yen tends to benefit and high yielding currencies fall when risk aversion increases as investors exit carry trades where they use the low yielding currency to fund purchases of higher yielding assets.

The euro was down 0.6 percent against the yen at 160.40 EURJPY= while the dollar was little changed at 103.75 yen.

UK PRICES SURGE

Data showing a fall in British housing and retail sales underlined economic weakness spilling over from the credit crunch amid rising inflationary pressures with CPI growing at its fastest rate since May 2001. Click on [nL13567339]