* Euro hits 1-wk high vs dollar as Ifo survey tops forecasts
* Yen climbs; dlr hits weakest since March 30 at 96.65 yen
* Sterling falls as UK economy shrinks 1.9 percent q/q in Q1
(Adds quotes, updates prices)
By Jessica Mortimer
LONDON, April 24 (Reuters) - The euro jumped to its highest level in a week against the dollar on Friday after a better-than-expected German business confidence survey fanned hopes that the worst may be over for the euro zone economy.
The yen rose broadly, hitting its highest level since the end of March against the dollar as concerns about the U.S. stress tests on banks and the fate of U.S. automakers encouraged investors to seek the perceived safety of the Japanese currency.
Meanwhile, grim UK data showing that the British economy contracted by its biggest amount in 30 years in the first three months of the year sent sterling lower.
The euro enjoyed broad gains following news that the German Ifo business climate index rose to 83.7 in April from 82.2 in March, beating forecasts for 82.3, while the survey's current conditions and expectations indices also rose.
"Since the Ifo numbers, euro/dollar has been looking increasingly perky," HSBC director of currency strategist Paul Mackel said.
"The euro has been finding its feet and I expect that to continue," he added.
At 1007 GMT, the euro jumped by 0.6 percent against the dollar to $1.3222, not far off an earlier session high of $1.3274, its highest in a week.
The dollar fell 1 percent against the yen to 97.04 yen, having earlier hit its lowest since March 30 at 96.65 yen.
The euro also fell 0.5 percent against the yen to 128.31 yen, but it was well above an earlier low around 127.27.
Elsewhere, sterling fell by 0.7 percent against the dollar to $1.4612, while the euro jumped by 1.4 percent against the UK currency to 90.46 pence, having hit a two-week high of 90.75 pence.
The falls followed news that the UK economy contracted by 1.9 percent in the first quarter from the previous three months, much more than the 1.5 percent fall forecast and the biggest contraction since 1979..
EURO SHINES
The euro's strong performance came as the Ifo data sparked optimism that the region's recession may not be worsening.
A string of economic data recently has given signs of a tentative improvement, with further figures on Friday showing French consumer spending also rose much more than forecast in March.
"The improvement in the Ifo index does not imply that the German economy is out of the woods yet, but provides further evidence that the first half of 2009 should signal the bottom of its recession," Calyon analyst Stuart Bennett said in a note to clients.
Hitting the bottom, however, "may not mean a rapid recovery" and this could limit the euro's gains against the dollar, he added.
Investors remain cautious pending the results of U.S. stress tests on banks and with concerns about automakers lingering in the background as sources said Chrysler was readying a Chapter 11 filing as a contingency. See.
"The yen has gained on short covering ahead of the weekend, given the uncertainty over General Motors and Chrysler and about the U.S. stress tests, and also because the yen is the currency that has been most sold recently," Frankfurt-based currency analyst at Commerzbank Antje Praefcke said.
U.S. data on Friday include durable goods orders figures at 1230 GMT and new home sales figures at 1400 GMT.
Market players were also awaiting developments at the meeting of Group of Seven finance ministers in Washington as they discuss the global economic crisis, though analysts said no major market-moving developments are expected.
(Reporting by Jessica Mortimer; Editing by Ruth Pitchford)