Dollar weakens as euro rides demand linked to cross-border deal

New York

THE dollar weakened against the euro as the common currency climbed in a move dealers said may have been driven by anticipated currency demand arising from a Japanese bank's plans to purchase a German multi-billion dollar aviation finance business.

Signs of economic stabilisation in China as well as a strong start to the US corporate earnings season boosted demand for riskier assets, leaving the greenback to turn in its worst weekly performance against the euro in four weeks.

The euro was 0.4 per cent higher against the dollar at US$1.1295, its highest since March 26. Speculators were buying the euro in response to reports on Mitsubishi UFJ Financial Group's planned purchase of the aviation financing business of Germany's DZ Bank, dealers said.

Investors' appetite for riskier currencies got a boost after Chinese data showed exports rebounded last month, helping offset weaker imports, and reports of another reduction in Germany's growth forecasts, analysts said. Data from Europe was encouraging. Eurozone industrial output declined by less than expected in February.

US stocks climbed back to near record highs on Friday after the largest US bank, JPMorgan Chase & Co, soothed worries that the first-quarter earnings season would pour cold water on Wall Street's big rally back from last year's slump.

Against the Japanese yen, the dollar rose 0.35 per cent.

The Australian dollar , which is sensitive to shifts in risk sentiment, jumped 0.69 per cent.

The British pound rallied as the immediate risks around Brexit receded after the postponement of the departure date and as the dollar suffered a broad selloff, although collapsing volatility signalled a reluctance to bet big. Sterling was up 0.13 per cent at US$1.3071. REUTERS