FOREX-Dollar boosted by Citi results even as fears remain

* Dollar rises as Citi reports smaller-than-expected loss

* Euro capped as Trichet notes risks to growth

* Broad dollar sentiment still clouded by financial woes (Recasts, updates prices, adds comment)

By Nick Olivari

NEW YORK, July 18 (Reuters) - The dollar climbed against a basket of six major currencies on Friday, as Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) posted a smaller-than-expected quarterly loss, helping to calm fears about the health of the U.S. financial sector.

The results from Citi, the largest U.S. bank, add to positive earnings news from other banks such as Wells Fargo & Co. (WFC.N: Quote, Profile, Research, Stock Buzz) and JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) earlier this week.

The dollar has been steadily losing value against most major currencies for several years but the latest downleg was prompted by concerns about the stability of the U.S. financial system as large banks and institutions struggle to cope with defaults on reckless home loans made during the housing bubble.

"Citi earnings have encouraged the market to take on more risk and given (the dollar) a lift," said Stephen Malyon, senior currency strategist at Scotia Capital in Toronto. They were "consistent with other bank earnings seen earlier this week, which has turned sentiment around on the dollar a little bit."

The dollar also benefited from sharp falls in sterling after the Financial Times reported the UK Treasury is working on plans to change its fiscal rules. This could effectively give it more leeway to increase borrowing as a way of mitigating the effects of an anticipated economic slowdown. See [ID:nL17632891].