February 8, 2018 / 9:05 AM / 17 days ago

FOREX-Dollar hits 2-week high as European shares open lower

* Euro hits 2-week low as European stock fall again

* Higher U.S. Treasury yields underpin dollar

* Dollar rebound likely unsustainable this year - poll

* New Zealand dollar skids as RBNZ holds steady

* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

By Jemima Kelly

LONDON, Feb 8 (Reuters) - The dollar hit a two-week high against a basket of major currencies on Thursday, with investors flocking to the relative safety of the greenback as European share prices fell back again after a modest recovery the previous day.

A selloff across global stock markets and bets that the United States could see at least three interest rate hikes in 2018 have driven the dollar up in recent days, with the currency gaining more than 2 percent against its basket over the past week.

The euro had earlier traded higher on the day against the greenback as Asian share prices stabilised, but it slipped back as European stock markets opened lower again, having staged a modest recovery on Wednesday.

By 0830 GMT the euro was down 0.3 percent at a two-week low of $1.22355. The single currency has lost more than 3 cents since hitting a three-year high of $1.2538 just 10 days ago.

“The market is in consolidation mode,” said Commerzbank currency strategist Esther Reichelt, in Frankfurt. “The dollar performed relatively well during the stock market turmoil, and this experience determined the market sentiment going forward.”

Reichelt added that the euro had looked likely to fall, after climbing for seven consecutive weeks despite an increasingly divergent monetary policy between the United States and Europe, where the European Central Bank is still in the midst of an expansive asset-purchase programme.

Traditional safe havens such as the yen and Swiss franc have seen only modest gains during the recent stock market volatility, and indeed the dollar was up against both on Thursday .

“Everyone knew that the stock market was due a correction so there’s no sense of panic, and that dampens demand for safe havens,” said Reichelt.

Higher U.S. yields also underpinned the greenback.

“Yesterday, U.S. Treasury yields rose, so generally speaking, that has led to dollar strength,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.

The yield on benchmark 10-year Treasury notes stood at 2.824 percent, compared with its U.S. close of 2.843 percent on Wednesday.

The benchmark yield rose as high as 2.885 percent on Monday, its highest since January 2014, after stronger inflation data led investors to fear that the Federal Reserve may raise rates more often than previously expected.

The dollar’s rebound is unlikely to be sustainable, according to a Reuters poll of strategists published on Thursday.

The New Zealand dollar was the biggest mover among developed-market currencies, skidding as much as 0.6 percent to four-week lows of $0.7192 against its U.S. counterpart after the Reserve Bank of New Zealand kept interest rates steady at a record low.

It said volatility in equity markets this week was a warning that global markets were nervous about the risk of higher inflation and rising interest rates.

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 (Reporting by Jemima Kelly; Additional reporting by Lisa Twaronite in Tokyo; Editing by Hugh Lawson)

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