Euro slides versus dollar

By Naomi Tajitsu

LONDON (Reuters) - The euro fell against the dollar and the yen on Friday, brushing off an early rise in European shares as investors awaited data on euro zone growth that was expected to show the region has fallen into recession.

Figures earlier in the day showing France had managed to eke out positive growth in the third quarter did little to help the single European currency, while traders also continued to dump higher-yielding currencies ahead of a meeting of G20 economic leaders later in the day.

"Risk aversion is very high and comments from policymakers at the G20 meet could set currencies off again ... so we're probably in for another day of choppy trading," said Philip Shaw, chief economist at Investec.

By 0900 GMT, the euro was 1 percent lower at a session low of $1.2683, nearing a two-week low of $1.2387 hit on Thursday.

The single European currency also struggled against the low-risk, low-yielding yen, falling 1.6 percent to 122.83 yen. A 3 percent rise in European shares offered little joy to the struggling euro.

Despite its broad weakness, the euro hovered near a record high against sterling hit the previous day as investors are convinced recession in the UK will be more severe than in the euro zone. The pair traded at 85.40 pence, near an all-time high of 86.62 pence.

Sterling suffered across the board, hovering near a 6-1/2 year low against the dollar of $1.4555 hit on Thursday.

The dollar fell 0.7 percent to 96.88 yen.

DATA, G20 AHEAD

Third-quarter euro zone growth data due at 1000 GMT is expected to show a 0.2 percent fall. This would follow a similar slide in the previous three months and show the region has entered a technical recession.

Data announced earlier in the day showed the French economy grew 0.1 percent July-September [nPAB004497], and analysts said the unexpectedly strong figures may suggest that an excessively weak euro zone growth reading was unlikely.

Still, market participants said the euro would stay under selling pressure in volatile trade as investors continue to dump risky assets before the G20 meeting begins in Washington later in the day.

Heading into the G20 meeting, analysts were wary that the event would yield major changes in the international financial structure, which would likely keep investors away from taking on risky positions and continue to boost the dollar and the yen.

"The best that might occur would be a reiteration of commitments by governments to cooperate in reigniting global activity and possibly some increase in support for IMF lending from large surplus/reserves rich countries," analysts at Barclays said in a research note.

They added the risks stemming from the gathering included the possibility disagreements between nations on the causes of the crisis and long-term financial market reforms obscure the common ground on immediate policy needs, which could slow the recovery of the financial system.

(Reporting by Naomi Tajitsu)