* Euro falls 0.5%, weaker PMI data hurts sentiment
* Dollar rises but still headed for 9th weekly loss
* China's yuan hits seven-month high vs dollar
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Recasts with euro decline, adds details, graphic)
By Tommy Wilkes
LONDON, Aug 21 (Reuters) - The euro reversed earlier gains
and fell on Friday as an August batch of business surveys
pointed to a stuttering economic recovery, although the dollar
remained on course for its ninth consecutive weekly decline
versus rival currencies.
Flash euro zone manufacturing and services purchasing
managers index (PMI) numbers for August were worse than
expected. IHS Markit's flash Composite Purchasing Managers'
Index, seen as a good gauge of economic health, sank to 51.6
from July's final reading of 54.9. The single currency had been falling before the results were
released but then extended losses and was last down 0.5% at
$1.1806 EUR=EBS .
"The latest flash PMI data for August in France and Germany
would appear to point to a plateauing in economic activity,
particularly in the services sector, where rising infection
rates here could well be tempering economic activity on the
margins," said Michael Hewson, Chief Market Analyst at CMC
Markets.
The euro has been the biggest beneficiary from a tumbling
dollar in recent weeks, surging from under $1.12 in early July
to a more than-two-year high of $1.1966 this week.
While the dollar rebounded on Friday it was still headed for
its ninth consecutive weekly decline. Should the greenback end
the week down, that would mark the longest losing streak since
the summer of 2010 and a run that has only happened 5 times
since 1990.
A larger-than-expected rise in weekly jobless claims in the
United States and warnings from Fed officials about a recovery
in hiring have raised doubts about how quickly the world's
largest economy will bounce back from the coronavirus.
Those concerns, combined with an excess supply of dollars
already in circulation, are likely to weigh on the greenback in
coming weeks, analysts say.
The dollar index, which measures the greenback against a
basket of rivals, rose as the euro fell and was last at 93.005
=USD , up 0.3%.
Republicans and Democrats are struggling to agree on
additional stimulus to boost the economy, in contrast to the
euro zone where investors have welcomed the scale of the
economic packages recently launched.
Commerzbank currency analyst Ulrich Leuchtmann said that
uncertainty about the dollar was undermining the greenback's
safe haven credentials.
"Everything all told: as long as the market considers the
dollar to be excessively high risk a sustainable U.S. dollar
recovery remains unlikely," he said.
YUAN HITS 7-MONTH HIGH
The standout performer on Friday was China's yuan, which in
offshore markets CNH=EBS briefly hit 6.8935, its strongest
since Jan. 21, before falling back as the dollar recovered.
China's currency has recovered all of its losses since the
Chinese city of Wuhan, where the coronavirus initially broke
out, was first put on lockdown, as investors bet on a strong
recovery in the country's economy.
Sterling slipped back below $1.32. It was last down 0.2% at
$1.3196 GBP=D3 while it rose versus the euro to 89.50 pence
EURGBP=D3 .
Currency moves elsewhere were contained. The dollar fell
0.3% versus the Japanese yen to 105.50 JPY=EBS .
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U.S. dollar index https://tmsnrt.rs/31eCh5W
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(Editing by Kirsten Donovan)