* Dollar index sinks to lowest since January
* U.S. retail sales undermine confidence in economic pickup
* Kiwi jumps on strong local data (Recasts after start of European trade)
By Patrick Graham
LONDON, May 14 (Reuters) - The dollar fell to its weakest against a basket of major currencies since the launch of euro zone quantitative easing in January on Thursday, hit by growing concern that the U.S. economy has not just been suffering from a winter chill.
The euro surged past $1.14 for the first time since February in early trade in Europe and the yen broke back through 119 yen to its highest in two weeks. Sterling, resurgent since UK elections last week, hit a six-month high of $1.5795.
Traders said a handful of stop-loss orders to close losing bets on the dollar gaining had been hit at the start of European trading, driving it weaker across the board.
But the dominant factor was still Wednesday's shockingly poor U.S. April retail sales numbers, which undermined all those who believed a slowdown at the start of this year was due to poor weather and port strikes on the West coast.
"We've just hit stops this morning, there's nothing more than that," said Peter Kinsella, a currency strategist with Germany's Commerzbank in London.
"We thought we were going to see a good recovery in Q2 after the poor Q1 and those numbers yesterday have just taken the shine off the dollar for the moment. I still think it's a correction that should allow people to get back into short euro trades, but we may have a week or two to run yet."
By GMT 0814 the euro was up half a percent at $1.1406, having traded as high as $1.1431. The dollar index fell as much as 0.6 percent to 93.175, its lowest since the launch of euro zone quantitative easing in January.
The dollar's weakness -- shattering for now the predictions of many major banks for a run at parity with the euro -- raises questions of how other major economies who have been helped by the dollar's strength over the past year will react.
The Bank of England struck a warning note on Wednesday about the strong pound's impact on inflation, growth and the outlook for interest rates. Analysts say Australian policymakers may also find themselves under pressure to do more to weaken their own dollar if the U.S. weakness persists.
New Zealand looks to be in a far stronger position and its dollar had been by far the biggest mover on major markets overnight, surging after unexpectedly bullish retail sales numbers.
It handed back some of those gains to trade a third of percent higher in Europe at $0.7508. (Editing by Ralph Boulton)