CURRENCIES: Dollar Falls Against Euro As Risk Appetite Returns By Deborah Levine The dollar advanced marginally on a broadly lower Japanese yen Friday but traded mixed against other major currencies as European equities gained ground and stocks opened higher on Wall Street. Risk appetite remains the dominant theme in otherwise choppy, range-bound currency markets, analysts said. The yen bore the brunt of the exit from perceived safe havens, they said. The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, stood at 77.983, down from 78.000 late Thursday. The euro bought $1.4372, up slightly from $1.4365 in late New York trade on Thursday. Sterling, which has been on the defensive this week, gained ground to trade at $1.6353, up from $1.6230. Helping set the trading tone, the Commerce Department said U.S. consumer spending rose 0.2% in July, the third monthly increase in a row. U.S. personal incomes were unchanged. The report was slightly weaker than expected, although upward revisions to May and June left income and spending levels higher than forecast. Still to come is a report expected to show consumer sentiment improved this month. "The upside surprise earlier in the week for the Conference Board Confidence report does suggest the potential for an upside surprise in the University of Michigan figure, as they do tend to exhibit a significant correlation," said T.J. Marta, chief market strategist at Marta on the Markets. "The risk on trade is helping to boost the euro with sentiment indicators all showing improvement and helping to boost the single currency," wrote strategists at Brown Brothers Harriman. The euro had erased an earlier loss after the European Commission's gauge of economic sentiment for the 16-nation euro zone showed a stronger-than-expected increase in August. The indicator rose to 80.6 from a reading of 76 in July; economists had forecast a rise to 78. The survey "shows further signs of improvement, in keeping with the message from other survey indicators, notably the [purchasing managers indexes]," said Kerri Maddock, economist at Barclays Capital. "Collectively, along with other data such as the German new orders, we continue to expect euro-area GDP to grow by around 0.5% (quarter-on-quarter) in Q3, marking the end of recession," Maddock said. "That said, employment expectations continued to be very depressed across all sectors." Japanese election in focus The yen also had major domestic issues to concentrate on, batted around by unemployment data and upcoming lower house elections on Sunday. The greenback bought 93.83 yen, up from 93.36 yen Thursday. The Japanese government on Friday said the nation's unemployment rate rose to 5.7% in July, up from 5.4% the previous month -- the greatest since World War II and higher than the 5.5% that economists had projected. Sunday's elections are widely expected to bring the opposition Democratic Party of Japan to power. "A DPJ victory at Sunday's polls in Japan likely bodes ill for the yen, given the uncertainty surrounding the government formation and a lack of fiscal prudence in the DPJ's main policies," said Michael Hart, a currency strategist at Citi, in a research note. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=I5gpE8lrGQfJ4vkJC6SOkQ%3D%3D. You can use this link on the day this article is published and the following day.

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