LONDON (MarketWatch) -- The dollar mostly weakened Friday as European economic growth came in much stronger than expected, helping whet investors' appetite for risk and stemming the recent tide of safe-haven flows into the greenback, the Japanese yen and the Swiss franc. The dollar index (DXY 82.65, +0.02, +0.02%) , a measure of the U.S. unit against a trade-weighted basket of major currencies, fell 0.2% to 82.455. The euro (EURUSD 1.2804, -0.0022, -0.1715%) , however, saw only limited benefit. The single currency pressed above $1.2900 in early European action, gaining after national data showed Germany's gross domestic product expanded at a robust 2.2% pace in the second quarter -- the fastest quarterly growth in 20 years and a rate that easily surpassed expectations for 1.4% expansion. Read about German GDP growth. Germany was the overwhelming force behind a 1% quarterly increase in euro-zone GDP, which marked the strongest expansion in four years. Read about euro-zone GDP. But the early push soon lost steam, with the euro slipping back to trade around $1.2825, down slightly from $1.2834 late Thursday. "Better European growth news doesn't alter the fact that the drivers of the euro's recovery against the dollar are all pretty much played out," wrote strategists at Societe Generale. "The sovereign credit crisis faded, European short-term rates rose, U.S. bond yields made a huge downward adjustment, and as we can see, European growth dramatically outperformed the U.S." Second-quarter GDP growth for the U.S. economy, the world's largest, is seen likely to be revised lower after data on international trade for June released earlier this week showed an uptick in imports and a sharply wider deficit between exports and imports. See more on the trade gap. Meanwhile, the euro this week has been undercut by worries about the global growth outlook, which fueled safe-haven flows into the dollar, the yen and the Swiss franc, strategists said. Renewed concerns about the euro-zone's debt woes have also played a role as worries mount over the health of Ireland's financial sector. Read about Ireland and euro-zone debt worries. The dollar slipped 0.5% against the yen (USDYEN 85.7300, -0.1400, -0.1630%) to trade at ¥85.62. The yen fell on Thursday as Japanese officials attempted to jawbone the currency lower following a 15-year high against the dollar hit earlier in the week below ¥84.80. The British pound (GBPUSD 1.5590, +0.0016, +0.1027%) traded at $1.5598, up from $1.5577 late Thursday. The euro was up 0.1% versus the Swiss franc (EURCHF 1.3484, +0.0020, +0.1485%) to change hands at 1.3483 francs. The dollar (USDSWF 1.0529, +0.0030, +0.2858%) gained 0.2% to trade at CHF1.0516.

Source