October 11, 2017 / 7:51 AM / a year ago

FOREX-Catalonia relief sends euro to two-week high

* EUR supported after solid German data, ebb in Catalonia concerns

* Dollar wobbles, Trump’s tax overhaul plan seen facing obstacles

* Dollar index kept away from 10-week high set last week

* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh

By Jemima Kelly

LONDON, Oct 11 (Reuters) - The euro climbed to a two-week high against a broadly weaker dollar on Wednesday on relief that Catalonia had stopped short of formally declaring independence from the rest of Spain.

In a much-anticipated speech to the Catalan parliament late on Tuesday, regional leader Carles Puigdemont made only a symbolic declaration of independence, calling for talks with Madrid in a gesture that eased fears of immediate unrest in the heart of the euro zone.

Spanish Foreign Minister Alfonso Dastis said on Wednesday that there was room for negotiations within the framework the country’s existing constitution, although he said the Calatan leader’s speech had been a “trick”.

The euro climbed to as high as $1.18345 in early trade on Wednesday, its strongest since Sept. 26.

“We are in a negotiation stage, and from that point of view that’s a calming-down of the tensions that were there earlier in the week. But the situation is still potentially incidiary,” said Rabobank currency strategist Jane Foley, in London.

Foley added that any moves higher in the euro were likely to be limited, given the extent to which it has already appreciated against the dollar - over 12 percent so far this year.

The euro was also helped by strong economic data out of Germany on Tuesday as well as broad weakness in the dollar.

U.S. President Donald Trump’s public feud with Tennessee Senator Bob Corker, an influential fellow Republican, has raised concern that his push for a tax-code overhaul could be harmed.

“Squabbles surrounding Trump’s efforts come as no surprise, but it is still not helping the dollar,” said Yukio Izhizuki, senior currency strategist at Daiwa Securities in Tokyo.

The dollar index - which measures the greenback against six major rivals - slipped 0.1 percent to 93.175, having hit a 10-week high last week.

Stronger-than-expected U.S. wages had helped the greenback rise to a three-month high of 113.440 yen on Friday, but the latest flare-up in tensions with North Korea reduced the gains.

Investors were awaiting the release of minutes of the September Federal Reserve policy meeting later in the session. The Fed had signalled at the meeting that it may raise interest rates for a third time this year even with inflation staying below its 2 percent goal.

But with the Fed funds futures almost fully pricing in the likelihood of a rate hike in December and the recent spike in Treasury yields losing momentum, analysts said fresh factors could be needed for the dollar to renew its advance.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Reporting by Jemima Kelly; Additional reporting by Shinichi Saoshiro in Tokyo Editing by Jeremy Gaunt)

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