FOREX-Dollar rallies on stronger-than-expected U.S. data

* US GDP grows 5.7 pct in Q4, Chicago PMI also stronger

* Euro hits 6-1/2-month low versus dollar on fiscal woes

* Dollar index climbs to more than 5-month high (Adds quotes, details, updates prices)

By Wanfeng Zhou

NEW YORK, Jan 29 (Reuters) - The dollar rose against major currencies on Friday after a slew of stronger-than-expected data boosted the view the U.S. economy was recovering faster than other developed countries.

The euro fell below $1.39 to a 6-1/2-month low as investors remained concerned about the fiscal health of some of the smaller euro zone countries, such as Greece and Portugal.

The U.S. economy grew at a 5.7 percent clip in the fourth quarter, the quickest pace in more than six years. Separate reports showed business activity in the U.S. Midwest expanded more than expected, while consumer sentiment hit a two-year high. For details, see [ID:nN28246399]

"The market is looking at this as a sign of U.S. resilience and contrasting it with signs of weakness in the euro zone and UK and even Asia," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. "So that's a reason the dollar is benefiting, and I'd have to reckon with a higher dollar in the coming weeks."

In midday trading, the dollar rose 0.6 percent to 90.39 yen , after climbing to 90.92, the highest in about a week, according to Reuters data.

The euro traded at $1.3870 , down 0.7 percent on the day. It had fallen to $1.3863, the lowest since July 9, according to Reuters data.

The euro was on track for a weekly loss of 2 percent against the dollar, the worst performance in six weeks.

The European Union's monetary affairs commissioner, Joaquin Almunia, said Friday an EU bailout for Greece was not possible, sparking a widening in the premium that investors demand to hold 10-year Greek government bonds rather than benchmark German bunds. [ID:nLDE60S0XN]

Despite Almunia's comments, official support was still likely, said Credit Suisse currency strategist Ray Farris.

"If the Greeks fulfill their commitments, EU assistance will be easier to give. There is official support, but none of it is unconditional and the bulk of the heavy lifting has to be done by Greece," he said.

The ICE Futures U.S. dollar index, a measure of the greenback versus a basket of six major currencies, hit a high of 79.444 <.DXY>, the strongest level since mid-August. It last traded up 0.6 percent.

A spike in risk aversion stemming from China's increase of bank reserve ratios and the credit worries in the euro zone has helped boost the dollar in recent sessions.

"We continue to see these headlines about the sovereign risk in the euro zone," said Amelia Bourdeau, senior currency strategist at UBS in Stamford, Connecticut. "I don't think market participants will go on to add risk ahead of the U.S. payrolls report next Friday and I think the dollar will remain strong on risk aversion."

The euro also tumbled against the Swiss franc, dropping to 1.4632 francs , its lowest level since last March. Wariness of Swiss central bank intervention capped a further rise in the franc, traders said. (Additional reporting by Steven C. Johnson and Vivianne Rodrigues; editing by Leslie Adler)