3 Min Read
* Euro recovers after dip on comments from ECB's Draghi
* Still held back by risks from French elections
* Swedish crown hit by weak retail sales after Riksbank blow
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, April 28 (Reuters) - Solid growth numbers from Spain prodded the euro higher in early European deals on Friday after a week trading at its highest in almost six months on the back of a perceived easing in political risks in France.
European Central Bank chief Mario Draghi took a cautious line at Thursday's post-policy meeting news conference, pulling the single currency back below $1.09 and encouraging talk that the bank will seek to cap any gains for the euro for fear of undermining hard-won rises in inflation.
Soft French consumer spending and growth figures underlined the risks that remain to the euro zone's economic recovery from a decade of debt and financial trouble.
But the slightly-above-forecast Spanish numbers - showing 3 percent growth in the first quarter - again pointed to the improvement that has some on markets expecting the ECB to begin to rein in its emergency stimulus later this year.
CIBC strategist Jeremy Stretch said next weekend's second round of presidential elections was likely to weigh on the euro but could also be the trigger for a bigger push higher if centrist Emmanuel Macron makes good on poll predictions of a clear victory.
"We are in a holding pattern, waiting for the monetary tightening we have been talking about to come back fully onto the agenda," he said.
"Draghi was clearly reluctant to sanction a changing of guidance with the risk of pushing the euro higher (but) once we get beyond next weekend it may be the time for the euro to have a little bit more of an upswing."
By 0743 GMT, the euro had gained 0.14 percent to $1.0887 to stand a little under a cent below Wednesday's 5-1/2 month high.
That left the euro-dominated dollar index flat at 99.06 and on course for a third monthly fall so far this year.
Against its Japanese counterpart, the dollar inched up to 111.30 yen, up 1.9 percent for the week but still down 0.2 percent for the month.
Tokyo markets will be closed for three days from May 3 for the string of holidays known as the Golden Week.
"The ... holidays are ahead, and investors have already adjusted their positions," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
"Because of the holidays, we're not seeing the usual Japanese profit-taking or exporter selling on the dollar's rise, though some investors are still hoping for a chance to buy the dollar on dips."
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Tokyo markets team; Editing by Tom Heneghan)