(Corrects second paragraph to say Tuesday, not Wednesday)
* Euro gains vs dlr; trade still very thin
* Aussie jumps more than 1 pct to 12-day high vs dollar
* Dlr stays supported vs yen on U.S. economic outlook
(Recasts, adds quote, updates prices)
NEW YORK, Dec 29 (Reuters) - The dollar traded lower against the euro and higher-yielding currencies such as the Australian dollar on Tuesday on improved risk appetite amid expectations for a U.S. economic recovery.
U.S. data released on Tuesday, including consumer confidence data, confirmed the U.S. economy is improving but failed to overwhelm investors [ID:nN29186364].
Volumes were also thin and analysts were wary of drawing too many conclusions from intraday movements.
The U.S. consumer confidence report, issued by the Conference Board, "confirms the market's view that the economy is stabilizing and 2010 will be a better year than 2009," said Michael Woolfolk, senior currency strategist at BNY Mellon. "
In New York trade, the euro was up 0.3 percent at $1.4420
"Thin year-end activity has seen the U.S. dollar weaken," Marc Chandler, head of global currency strategy at Brown Brothers Harriman in New York, said in a note to clients. "Some contacts linked the euro buying to month-end demand, with some tied to sterling offers too."
The higher-yielding Australian dollar rose 1.2 percent to a
12-day high, and last traded at US$0.8876
The dollar index, a non-traded gauge of the greenback's performance against six major currencies, fell 0.2 percent to 77.475 <.DXY>.
The dollar index was still in sight of a 3-1/2-month high touched last week, but some traders said the U.S. currency may struggle to rise further after speculators have finished covering short dollar positions.
Data on Monday showed speculators were long in the U.S. currency for the first time since May, ending 32 straight weeks of short dollar positions. [nN28138355]
Against the yen, the dollar rose 0.1 percent to 91.69 yen
Traders said upward pressure on long-term Treasury yields is providing support to the dollar against the yen after U.S. government bonds traded lower the previous day and pushed the benchmark 10-year note yield to its highest in nearly five months. [US/]
The dollar showed little reaction to the Federal Reserve's proposal on Monday to create a new mechanism, a "term deposit facility", to help the central bank's policymakers withdraw money from the banking system when they decide to tighten monetary policy. [nFEDAHEAD]
There was also limited reaction to a Standard & Poor's/Case-Shiller indexes report on Tuesday showing U.S. home prices were unchanged in October, dashing hopes for a sixth straight monthly increase. [ID:nNYS007656]. (Reporting by Nick Olivari)