FOREX-Dollar boosted by Citi earnings, euro retreats

(Recasts, updates prices, adds comment, changes byline, changes dateline, previous LONDON)

NEW YORK, April 18 (Reuters) - The dollar touched a seven-week high against the yen and pulled further away from a record low versus the euro on Friday after Citigroup surprised investors with results that were less bleak than many had feared.

This extended the euro's slide and helped push it down more than a full cent against the dollar and well away from a record high near $1.60.

Citigroup Inc (C.N), the largest U.S. bank, posted a quarterly loss of $5.1 billion, adding to losses in the previous quarter, and pre-tax write-downs of $6.0 billion For details, see [ID:nN18298428].

The figures showed financial institutions are continuing to suffer from the credit crunch, but Citi's write-downs were below some market expectations of up to $22 billion.

"Yen and Swiss franc are underperforming today with equities higher in Europe and the market relieved that another large U.S. financial institution has reported its quarterly earnings and investors were relieved it was not uglier than it was," said Stephen Malyon, senior currency strategist at Scotia Capital in Toronto.

Citi's announcement drove the dollar 1.8 percent higher to 104.40 yen JPY=, its strongest level since late February. The dollar index was trading at 72.400 .DXY.

The euro fell more than a full cent against the dollar to trade more than 1.0 percent down on the day at $1.5718 in early New York trading, well away from a record peak of $1.5983 hit earlier in the week according to Reuters data.

The euro was also stung by a sharp climb in sterling on expectations of an imminent UK plan to aid the struggling mortgage market.

Hope that the plan may limit the extent of UK interest rate cuts pushed euro/sterling down 1 percent percent to 79.08 pence EURGBP=, away from this week's record high at 80.98 pence. Sterling also rose 0.2 percent to $1.9941 GBP=, just down from a two-week high touched in earlier trading.

EURO CONSOLIDATES

The euro has jumped 8 percent to the dollar this year on the view that European interest rates will stay put until later this year, while the U.S. Federal Reserve is expected to cut rates further from the current 2.25 percent.

This would help to keep euro zone rates significantly higher than U.S. ones, keeping the euro's yield appeal intact.

Still, given the euro's ferocious gains in the past few months -- the euro sailed through $1.50 only two months ago -- analysts said the market was taking a breather ahead of $1.60.

"The move from $1.50 to $1.59 has been almost unrelenting so a consolidation is warranted in the short term," said Stephen Koukoulas, global strategist at TD Securities.

But he added that a push through $1.60 was only a matter of time, a view shared by many in the market.