* Dollar index hovers just below 13-month peak
* Pound and euro extend losses, support dollar
* U.S. CPI awaited for near-term trading cues
* Risk aversion props up yen against range of peers
* Rouble hits lowest since Nov 2016, lira marks record low
By Shinichi Saoshiro
TOKYO, Aug 10 (Reuters) - The dollar stood tall on Friday, hovering just short of a 13-month high against a basket of peers as European currencies such as the pound and euro continued to lose traction.
The Russian rouble dropped to its weakest since late 2016 after Washington said it would impose fresh sanctions on Moscow, while the Turkish lira plumbed a record low in the wake of a diplomatic rift with the United States.
The dollar index, which measures the greenback’s strength against a group of six major currencies, was up 0.05 percent at 95.550 after gaining 0.5 percent overnight. A rise above 95.652 would take the index to its highest since July 14, 2017.
In contrast, the pound has slumped 1.4 percent this week amid increasing speculation Britain will leave the European Union without an agreement regarding its future relationship with Brussels.
Sterling was little changed at $1.2830 after plumbing a one-year low of $1.2819 overnight.
The euro was steady at $1.1524 after brushing a seven-week trough of $1.1516.
The single currency had retreated 0.7 percent overnight, its decline accelerating after the European Central Bank said that risks to global growth are increasing as the risk of protectionism and the threat of higher U.S. tariffs sap confidence.
The euro was down 0.4 percent for the week, dogged by renewed investor concerns that Italy was heading for a costly and unsustainable spending spree.
“The dollar also has an edge on the euro amid continuing repatriation of funds to the United States, and the pound looks to keep retreating indefinitely with ‘no-deal Brexit’ the main driver,” said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.
The dollar dipped 0.1 percent to 110.92 yen, nudged off a session-high of 111.165. The pair has been caught in a relatively narrow 111.53-110.71 band this week.
“Dollar/yen is bound in range, with caution toward the U.S.-Japan trade talks capping the pair’s upside, but it is also seeing downside support before the U.S. CPI release,” said Imaizumi at Daiwa.
The U.S. consumer price inflation (CPI) report for July is expected to show inflation likely increased 0.2 percent, after rising 0.1 percent in June.
The United States and Japan on Thursday began what the two sides call “free, fair and reciprocal” negotiations on trade, with the discussions due to continue on Friday.
The yen was broadly lifted for the time being, edging higher versus the euro and Australian dollar, supported by risk aversion with equities across the region in retreat.
Meanwhile, the rouble retreated overnight to its lowest since November 2016, weakening beyond the psychologically important 65-per-dollar threshold.
The Turkish lira fell to a fresh record low of 5.588 after a meeting on Thursday between a Turkish delegation and U.S. officials in Washington yielded no apparent solution to a diplomatic rift over the detention in Turkey of a U.S. pastor.
Elsewhere, the New Zealand dollar remained on the back foot, stretching its overnight slide to $0.6598, its lowest since March 2016.
The kiwi lost 2 percent on Thursday after the Reserve Bank of New Zealand surprised the market by committing to holding rates at record lows until the end of 2020. (Editing by Joseph Radford)