LONDON (AFP) --
The euro rose on Thursday as a rebounding Chinese stock market led to investors buying the single currency in preference to the dollar and yen which are viewed as less risky currencies, traders said.
Approaching midday trade in London, the euro climbed to 1.4230 dollars from 1.4221 dollars in New York late on Wednesday.
Against the Japanese unit, the dollar rose to 94.37 yen from 94.03 yen late Wednesday.
"Correlation between improving risk sentiment and a weaker dollar remains in place," said Lee Hardman, currency analyst at The Bank of Tokyo-Mitsubishi UFJ in London.
The yen meanwhile fell on Thursday as the rebound in Chinese share prices calmed investor jitters about recent market volatility, dealers said.
"Market players (in Asia) are mainly monitoring Shanghai share prices," said Masatsugu Miyata, foreign exchange dealer at Hachijuni Bank. "If the Shanghai shares go up, investors will start selling the yen."
Chinese shares rebounded on Thursday, closing up 4.52 percent, clawing back some of its recent losses and giving a boost to growth-sensitive currencies such as the euro, dealers said.
But in general investors are wary of taking risks because of the recent swings in Chinese share prices, Miyata said.
The dollar had fallen sharply on Wednesday as rebounding share prices and oil futures reduced demand for the greenback, which -- like the yen -- is seen as a safe bet in times of turmoil.
"The dollar weakened against most major currencies as investors pared back 'safe haven' trades," NAB Capital analysts wrote in a note.
"A broad-based lift in commodity prices further underpinned the Canadian dollar, the euro and the Australian dollar."
Rallying oil prices raised hopes that global demand is improving as the global economy gets back on its feet after a brutal recession.
But some market watchers questioned whether the upbeat mood would last.
"I think many investors are simply waiting for oil prices to fall at any time," said Hachijuni's Miyata.
In London on Thursday, the euro was changing hands at 1.4230 dollars against 1.4221 dollars late on Wednesday, at 134.29 yen (133.72), 0.8607 pounds (0.8605) and 1.5169 Swiss francs (1.5160).
The dollar stood at 94.37 yen (94.03) and 1.0660 Swiss francs (1.0660).
The pound was at 1.6531 dollars (1.6526).
On the London Bullion Market, the price of gold nudged higher to 944 dollars an ounce from 943 dollars an ounce late on Wednesday.
