* Dollar index reaches 11-month high on upbeat U.S. data
* U.S. services industry activity at 8-1/2-year high in July
* Euro falls to nine-month lows, kiwi also under pressure
By Ian Chua
SYDNEY, Aug 6 (Reuters) - The dollar held near an 11-month high against a basket of major currencies early on Wednesday, having got a second wind after upbeat U.S. data bolstered expectations of solid economic growth in the third quarter.
The dollar index was last at 81.537, not far from the overnight peak of 81.626. The euro languished at $1.3370, having plumbed a nine-month trough of $1.3358.
Data on Tuesday showed U.S. services sector activity hit an 8-1/2 year high last month and factory orders surged in June.
“While it is clearly the lesser of the two ISMs, an 8-year high coupled with a blockbuster factory orders report will go a long way towards bolstering growth expectations for the second half of 2014,” said Michael Woodfolk, global markets strategist at BNY Mellon.
“Nonetheless, summer doldrum conditions prevail with markets susceptible to geopolitical risk.”
European data in contrast was mixed. Euro zone retail sales rose at their fastest rate in seven years in June and business activity expanded at the second-fastest pace in three years in July.
Yet the robust growth could not mask the deflationary pressures weighing on the region, a clear worry for the European Central Bank when it holds its policy review on Thursday.
But having unveiled a raft of measures in June to spur growth, the ECB is not expected to tinker with policy this month.
The euro also ceded ground on the yen, slipping to a near one-week low of 137.07. The greenback was relatively steady at 102.61, but off the overnight high of 102.93.
Against the dollar bloc currencies, the greenback reached a three-month high on its Canadian peer. It climbed as far as C$1.0977, continuing to recover from last month’s trough of C$1.0620.
The standout currency, however, was the New Zealand dollar, which skidded to two-month lows overnight after milk prices fell again at an auction held by Fonterra Co-operative Group, the world’s biggest dairy exporter.
It extended its decline early in Asia on data showing a moderation in jobs growth at home, an outcome that some suspect could buy the central bank more time to stay on the sidelines following four successive interest rate hikes this year.
The kiwi was last at $0.8442, having fallen as far as $0.8428. It is down 4.5 percent since reaching a peak of $0.8839 last month.
The trading session in Asia is shaping up to be a listless one, with no economic data of interest to speak of.
That should leave the focus on equity markets, which are likely to follow Wall Street lower amid concerns over escalating tensions in Ukraine. Any increase in risk aversion should help support the safe-haven yen. (Editing by Shri Navaratnam)