FOREX-Dollar rises after stronger US retail sales

* Dollar rises after stronger retail sales

* Chinese data further boost risk appetite

* Moody's sees no threat to UK, US top rating for now

(Updates prices, adds quotes, changes byline, changes dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, Dec 11 (Reuters) - The dollar rose against the euro and yen on Friday after a stronger-than-expected U.S. retail sales report stoked optimism about the economy.

Solid Chinese economic data overnight also helped lift global equity markets, encouraging investors to seek riskier assets funded by cheap borrowing in the yen.

Sales at U.S. retailers rose a more-than-expected 1.3 percent in November as consumers spent more on gasoline and a wide range of other goods. For details, see [ID:nN10129212].

"This is another notch in the belt for the recovery bulls. It is really an unexpectedly powerful number," said Boris Schlossberg, director of currency research at GFT Forex in New York.

"The report also confirmed what we saw overnight, which was very good Chinese data, suggesting that global recovery is gaining momentum," he added.

In early trading, the dollar rose 1.2 percent at 89.20 yen and the euro gained 1.1 percent at 131.39 yen .

Against the dollar, the euro was down 0.3 percent at $1.4690 .

Sterling earlier gained after Moody's Investors Service said that while Britain's borrowing and debt levels could threaten its Aaa rating over the next few years, it would not happen right away. [ID:nTOE5BA06R]

The top sovereign credit rating of the United States is also not under threat of a downgrade right now, Moody's said.

The pound hit a session peak of $1.6338, according to Reuters data, before giving up gains to trade 0.1 percent lower at $1.6265 . Sterling hit a near eight-week low below $1.62 on Wednesday on concern about Britain's precarious fiscal position.

The University of Michigan December consumer sentiment index, due at at 9:55 a.m. EST (1455 GMT), will be watched for clues about the strength of consumer demand .

Data overnight showed Chinese industrial output growth in November jumped to its strongest since June 2007, underlining China's brisk recovery. [ID:nTOE5BA02W]

(Additional reporting by George Matlock in London; editing by Jeffrey Benkoe)