FOREX-Dollar slides broadly as risk demand picks up

LONDON, April 30 (Reuters) - The dollar fell broadly on Thursday, hitting a three-week low against a basket of currencies as speculation that the global economic downturn is slowing continued to raise demand for riskier assets.

Concerns about the spread of swine flu waned on the view that the disease thus far would have limited economic impact, and a report of an imminent bankruptcy filing by Chrysler did little to stifle the risk rally, with analysts saying that markets have already priced in the U.S. automaker's failure.

The euro climbed along with high yielders as investors looked beyond a weak headline reading of U.S. growth and focussed on signs the economy may pick up in the coming months, which boosted currencies perceived to be higher risk.

"We've seen the stabilisation in the market, so the downside momentum is slowing, that is what the leading indicators are telling us, be it in the U.S. or the euro zone," said Michael Klawitter, senior forex strategist at Dresdner Kleinwort in Frankfurt.

"Despite the discussion of swine flu, the market no longer sees this as an economic risk, so risk aversion continues to decline, as reflected in equity markets, and in this environment, risk is to the upside."

European shares .FTEU3 rose nearly 2 percent in early trade.

Analysts said that optimistic market sentiment would likely continue so long as economic data does not significantly alter the view that the global economy is starting to show signs of recovery.

The dollar index .DXY, which tracks the U.S. currency's performance against the nation's biggest trading partners, was 0.8 percent lower at 83.948 by 0754 GMT, having fallen as low as 83.911, its lowest since early April.

Losses in the index were driven by a 0.8 percent climb in the euro to $1.3370 , which rose as high as around $1.3385 in early trade to hit its strongest in more than two weeks.