Euro soars over dollar as risk appetite returns

LONDON (AFP) - The euro leapt above 1.48 dollars in choppy trade on Tuesday as rising economic confidence whetted investors' appetite for the riskier-seeming European single currency over the safe-haven dollar.

In late afternoon trading in London, the euro was changing hands at 1.4833 dollars compared to 1.4771 dollars late on Monday.

The euro had peaked at 1.4876 dollars earlier in the trading day -- its highest level since August 2008.

The euro rose to 133.06 Japanese yen from 132.75 yen previously, while the dollar also fell against the Japanese currency, to 89.73 yen from 89.85 yen.

In commodity trade, gold hit a record high 1,068.63 dollars an ounce. The weak greenback makes the precious metal cheaper for investors holding other currencies, thereby boosting demand, traders said.

The euro earlier in the day fell as low as 1.4762 dollars after publication of Germany's ZEW survey which showed that Europe's top economy was recovering but warned any upturn would be gradual and the road to recovery bumpy.

The ZEW index, which measures the confidence of financial market players in the future health of the economy, fell to 56.0 from 57.7 in September.

This was well above the long-term average of 26.7 for the series but slightly worse than analysts surveyed by Dow Jones Newswires had forecast.

"Euro/dollar took a tumble on the back of a much weaker-than-expected German ZEW survey, though buyers quickly emerged lifting the euro back towards the 1.4800 level," said Forex.com analyst Jane Foley.

Analysts at French banking giant BNP Paribas said in a research note that "positive stock markets, lower equity volatility and a sharply stronger Canadian dollar added to the US dollar weakness."

In Britain, the pound fell against rival currencies after official data showed that the annual inflation rate slid to 1.1 percent in September, the lowest level for five years, as energy prices steadied.

Consumer Prices Index (CPI) annual inflation -- the government's target measure -- was 1.1 percent in September, down from 1.6 percent in August.

In London on Tuesday, the euro was changing hands at 1.4833 dollars against 1.4771 dollars late on Monday, at 133.06 yen (132.75), 0.9334 pounds (0.9348) and 1.5181 Swiss francs (1.5172).

The dollar stood at 89.73 yen (89.85) and 1.0237 Swiss francs (1.0267).

The pound was at 1.5886 dollars (1.5799).

On the London Bullion Market, the price of gold fell to 1,057.50 dollars an ounce from 1,058.75 dollars an ounce late on Monday after peaking at 1,068.63.