FOREX-U.S. dollar slides as ECB revives rate hike talk
* Euro rebounds from 6-month lows versus dollar
* ECB's Weber boosts euro with hawkish rhetoric
* U.S. durable goods report better than expected (Recasts, updates prices, adds comment, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 27 (Reuters) - The U.S. dollar tumbled from six-month peaks against the euro on Wednesday, as comments by a European Central bank official rekindled speculation about an interest rate increase in the euro zone to quell persistent inflation pressure.
Investors also remained wary of nagging troubles in the U.S. financial system as mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) moved back into the spotlight, leaving the dollar vulnerable in the near term.
The dollar also fell against a basket of six major currencies, retreating from this year's highs.
Comments on Wednesday by ECB Executive Board member Axel Weber, widely considered one of the most influential ECB policy-makers, fueled the dollar's freefall. Weber told Bloomberg News that any talk about lower interest rates in the euro zone was premature.
He also gave the impression that if the euro zone economy improves toward the end of the year, there might even be scope for tightening.
"Weber's comments today were quite hawkish. The ECB may subsequently change its view and it has done that in the past," said David Greenwald, chief operating officer at currency hedge fund TG Capital in Costa Mesa, California, with assets of about $130 million.
"But to me, the ECB's core view is hawkish and its core predisposition is to raise interest rates. So it's very hard for me to see a straight line move in the dollar " he added.
In late afternoon trading, the euro was up 0.5 percent on the day at $1.4725 <EUR=>, rallying from six-month lows at $1.4570 hit on Tuesday.
The dollar was little changed versus the yen, but had an upward bias for most of the session, buoyed by gains in the U.S. stock market after data showed an unexpected rise in new orders for long-lasting U.S. manufactured goods. It last traded at 109.59 yen <JPY=>.
Sterling was down 0.3 percent at $1.8345 <GBP=>, after earlier touching a two-year trough at $1.8286.
The British pound has dropped 9 percent from a three-month peak struck in mid-July, and is currently on track to post its worst monthly performance against the dollar since 1992.
TECHNICALS SUGGEST STEEP DOLLAR PULLBACK Continued...







