Dollar slumps against major currencies

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NEW YORK (Reuters) -- The dollar fell across the board Tuesday, pressured by comments from Russia suggesting a need for a global reserve currency other than the greenback.

Data showing a rebound in U.S. housing starts and an unexpectedly small rise in producer prices also weighed, reducing safe-haven demand for dollars, and investors snapped higher-yielding currencies such as the Australian dollar.

But Russia's dollar-negative comments dominated the market, a day after the country's finance minister backed the greenback as the world's reserve currency.

"The dollar is a little bit lower and it's a reaction to comments from Russian President Medvedev," said Omer Esiner, senior currency analyst at Travelex Global Business Payments in Washington.

"Clearly the largest holders of U.S. Treasurys are increasingly nervous about the fiscal stability of the U.S. going forward. That said, I don't think it's to anybody's interest to see a run on the dollar."

In early New York trading, the euro traded 0.6% higher at $1.3889, after climbing as high as $1.3933 following the housing data.

The euro had gained after German think tank ZEW said its economic sentiment index surged to 44.8 in June from 31.1 in May, exceeding expectations for a 35.0 print and suggesting market optimism for a recovery this year.

"Risk is back on the table today ... The recovery risk appetite layered atop the improvement in the ZEW has provided the fuel to get (euro/dollar) above $1.39," said Jeremy Stretch, strategist at Rabobank in London.

The dollar fell 1.2% against the yen to ¥96.63 .

With the data out of the way, traders focused on Tuesday's summit of Brazil, Russia, India and China (BRIC) in Russia, amid rising market speculation they may be looking to diversify reserve portfolios which contain hefty amounts of U.S. assets.

The first summit of the world's biggest emerging economies will confront the failures of the global financial system and could discuss ways to reduce the dominance of the U.S. dollar.

The BRIC leaders are seeking to use their economic clout to get a bigger say in how the world's financial system is run.

"The existing set of reserve currencies, including the U.S. dollar, have failed to perform their functions," President Dmitry Medvedev told a news conference in the Russian city of Yekaterinburg ahead of the BRIC summit.

"We will not do without additional reserve currencies," he said, adding that a new supranational reserve currency was also an option as IMF Special Drawing Rights gained a bigger role.

Russian Finance Minister Alexei Kudrin at the weekend had said the dollar's status as the world's main reserve currency was unlikely to change in the near term, clouding the market's understanding of Moscow's position.