* Dollar rises, pulls away from 14-month low vs euro
* Weaker stocks show lower risk tolerance
* Euro remains near $1.50, renewed rally expected
* China stimulus fears briefly rattle market
* Report suggests Canada can cope with stronger currency (Recasts, updates prices, adds details, changes byline)
By Nick Olivari
NEW YORK, Oct 22 (Reuters) - The dollar rose on Thursday and the euro retreated from a 14-month high as most investors bet the greenback's recent sharp slide against major currencies had been too far, too fast.
The dollar hit a one-month peak at 91.70 yen
Since April, the dollar has lost nearly 12 percent against six major currencies <.DXY>, with heavy selling in recent weeks pushing it to the lowest in more than a year.
Investors began to question how much further the dollar could slide, and how much other assets could rally, sending funds out of riskier currencies that have gained on signs of economic recovery.
"We've seen a big move across a host of assets lately and a lot of people are looking for when we're going to top out, so there's some profit-taking today," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto.
Worse-than-expected U.S. jobless claims data on Thursday offset generally positive U.S. earnings and rekindled doubts about the strength of the United States' economic rebound.
With U.S. unemployment near 10 percent, investors expect interest rates to remain at record lows well into 2010 even if signs of stronger world growth prompt other central banks to raise rates and begin winding down some emergency spending.
Low rates make the dollar less attractive than higher-yield currencies more closely correlated with economic recovery. At the same time, economic jitters boost the dollar's safety appeal.
The euro fell 0.1 percent at $1.5000
Sterling stalled a multi-day rally after data showing UK retail sales were flat in September helped slow the pound's upward momentum. For more see [ID:nLM512181].
Against the Canadian dollar, the greenback rose 0.7 percent
to C$1.0501
The Bank of Canada left interest rates at record lows this week and dashed expectations of a hike before mid-2010.
The Australian dollar
Sutton, though, said the dollar is still vulnerable, while Michael Klawitter, senior strategist at Commerzbank in Frankfurt, added "the euro's proximity to $1.50 suggests that the market is not taking the correction too seriously."
Another trigger for the dollar's gains, analysts said, were fears that China may start considering withdrawing some of its emergency stimulus programs after data showed the economy grew by a robust 8.9 percent in the third quarter.
But the government said it would retain its ultra-loose monetary and fiscal policies, and Chinese-based analysts added growth was not strong enough to trigger policy tightening. [ID:nSP452724]
"There are fears that when there is a removal of stimulus the underlying fundamentals won't be enough to drive global growth," Scotia's Sutton said. "But the truth is there is a lot of growth coming out of China and that whole region."
Economists polled by Reuters expect the U.S. economy to have expanded 3.2 percent in the third quarter, ending a recession that began in December 2007. (Additional reporting by Steven C Johnson in New York and Jessica Mortimer in London; Editing by James Dalgleish)