FOREX-Dollar gains ground after China Feb exports slump
* Dollar strengthens after China Feb exports slump
* Euro, sterling, Australian dollar fall
* Yen benefits from fall in other majors
* Dollar/yen seen trapped between seasonal flows
TOKYO, March 11 (Reuters) - The dollar strengthened against other majors on Wednesday, reversing early losses, after a slump in China's exports in February knocked down the Australian dollar and other major currencies.
The dollar began the Asian session on the back foot as safe-haven dollar buying lost steam following a rally in U.S. shares on Tuesday on news that Citigroup was profitable in the first two months of 2009. [ID:nN10541492]
But investor sentiment remains jittery, with worries about the world economy and banking sector never far from the surface, and the dollar spun around after data showed China's trade surplus shrank to $4.84 billion in February.
This was much lower than forecasts for a $27.3 billion surplus and exports slid 25.7 percent on a year ago. [ID:nPEK194920]
The Australian dollar AUD=D4 fell almost 1 percent at one stage before recovering a little to stand 0.5 percent down on the day at $0.6423. It also fell sharply against the yen.
"Australia has close links with China, and I can understand how the Australian dollar would be sold due to concerns about demand for raw materials," says Takahide Nagasaki, chief foreign exchange strategist for Daiwa Securities SMBC.
The euro shed 0.2 percent on the day to $1.2661 EUR=, falling from about $1.2725 before China's data. It had touched a two-week high of $1.2823 on trading platform EBS on Tuesday.
Sterling also fell, dropping 0.3 percent to $1.3699 GBP=D4, and edged towards a one-month low against the euro EURGBP=D4.
The dollar climbed 0.3 percent against a basket of currencies .DXY to 88.769. It struck a three-year peak on the index last week, at 89.624.
YEN STRENGTHENS TOO
The Australian dollar's fall helped the yen rise, pushing it up against the New Zealand dollar, then the euro and the pound, which a trader said were also hit by investors repatriating funds from Europe. Continued...
