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* ECB refrain, capital inflows lift common currency
* Kiwi rallies on rate hike, jobs data boosts Aussie
* U.S. dollar lags major currencies after mixed data
(Updates market action, adds quote, changes byline, dateline, previous LONDON)
By Richard Leong
NEW YORK, March 13 (Reuters) - The euro rose to 2-1/2-year highs against the dollar on Thursday in the wake of the European Central Bank's avoidance of further stimulus, signalling some confidence the region has put recession and its debt crisis behind.
Among other major currencies, the New Zealand and Australian dollars surged. The kiwi rose to its strongest against the dollar in 10 months after the New Zealand central bank hiked interest rates and signalled more to come as its economy has gained traction. Surprisingly strong employment data lifted the Aussie by more than 1 percent against the greenback.
"The policy messages and data support the euro and we think that will allow it to continue to push higher from here," Ian Stannard, a strategist at Morgan Stanley in London, said.
The single currency, pitched by many banks at the start of 2014 as one of this year's likely losers, has drawn strength from a trade and capital account that is roughly 30 billion euros to the good monthly.
The euro has gained 1.5 percent since the ECB took no action last week to ease policy and gave no indication it was about to. Traders said if it pushes past the round figure of $1.40 it could move swiftly higher, though it has a long way to reach $1.50 last seen in late 2009 prior to the onset of the euro zone debt crisis.
The common currency last traded up 0.2 percent at $1.3935
The U.S. dollar lagged against the euro, yen and other major currencies after mixed data on domestic retail sales and jobless claims failed to bolster analysts' outlook on the U.S. economy ahead of next week's policy meeting of U.S. policy-makers.
The dollar index
"The dollar got a brief boost here, but the data were mixed," said Brian Dangerfield, currency strategist at RBS Securities in Stamford, Connecticut.
U.S. jobless claims fell to a three-month low last week, while retail sales rose a tad more than expected by 0.3 percent in February but the January readings were downgraded.
Support for the yen and Swiss franc were underpinned by jitters over the tension between Russia and the West over Ukraine. The dollar was 0.4 percent weaker at 102.32 yen
KIWI, AUSSIE REBOUND
The New Zealand and Australian dollars staged a comeback overnight after they suffered earlier this week on a dramatic sell-off in copper and other commodities due to growing concerns over the Chinese economy, a major driver of demand for Australia's huge mining sector.
That move calmed overnight with Asian stock markets and copper prices stabilizing, helping a recovery in currencies closely linked to the prices of the raw materials of which China has been the major global buyer in recent years.
Still, the latest Chinese economic data was lukewarm at best. Industrial output rose 8.6 percent in the first two months of 2014 from a year earlier, missing market expectations, and growth in retail sales also fell short of forecasts.
"The numbers out of China were not impressive by all means, but it was not bad enough for players to create big fresh 'risk off' positions - thus currency reaction was limited," said a trader at a large Japanese bank in Tokyo.
Earlier the Reserve Bank of New Zealand (RBNZ) delivered a widely expected interest rate hike and flagged that a further 100 basis points of tightening was possible this year.
That pushed the New Zealand dollar up to $0.8606
"Today's communication strongly suggests the RBNZ will be on the front foot for the next few meetings," Michael Turner, strategist at RBC in Sydney, said.
In the meantime, the Australian government reported 47,300 jobs were created in February, more than double market forecasts.
The Aussie
(Additional reporting by Patrick Graham in London, Ian Chua in Sydney and Shinichi Saoshiro in Tokyo; Editing by Stephen Powell)
((richard.leong@thomsonreuters.com)(+1 646 303 6313)(Reuters Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net)(Twitter @RichardLeong2))
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Currency bid prices at 10:51 AM (1451 GMT)
Description Last U.S. Close
Previous
Session Pct Change YTD Pct
Change High Bid Low Bid
Euro/Dollar $1.3927 $1.3903 +0.17% +1.32% +1.3967 +1.3898
Dollar/Yen 102.3600 102.7500 -0.38% -2.65% +102.8600 +102.3000
Euro/Yen 142.55 142.86 -0.22% -1.77% +143.3700 +142.4900
Dollar/Swiss 0.8721 0.8739 -0.21% -2.32% +0.8749 +0.8699
Sterling/Dollar 1.6681 1.6616 +0.39% +0.76% +1.6716 +1.6608
Dollar/Canadian 1.1056 1.1118 -0.56% +4.11% +1.1122 +1.1043
Australian/Dollar 0.9091 0.8985 +1.18% +2.00% +0.9103 +0.8987
Euro/Swiss 1.2147 1.2151 -0.03% -1.01% +1.2167 +1.2138
Euro/Sterling 0.8347 0.8367 -0.24% +0.60% +0.8378 +0.8342
NZ Dollar/Dolar 0.8591 0.8522 +0.81% +4.69% +0.8606 +0.8513
Dollar/Norway 5.9253 5.9490 -0.40% -2.32% +5.9527 +5.9127
Euro/Norway 8.2548 8.2735 -0.23% -1.01% +8.2833 +8.2507
Dollar/Sweden 6.3518 6.3649 -0.08% -1.10% +6.3675 +6.3313
Euro/Sweden 8.8451 8.8526 -0.08% -0.24% +8.8586 +8.8346
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX World central bank news CEN
Economic Forecasts... ECON Official rates...INT/RATE
Forex Diary.......MI/DIARY Top events........M/DIARY
Diaries...........DIARY Diaries Index........IND/DIARY
Press Digests.....PRESS Polls on G7 economies..SURVEY/
European markets......MARKETS/))))
Keywords: MARKETS FOREX/