Dollar, Chinese shares steady as Europe wobbles

LONDON (Reuters) - The dollar inched higher on Friday, putting it on track for a monthly rise in May, while Chinese shares steadied after a plunge a day earlier that stoked concerns about the financial health of the world's second largest economy.

European stock markets were a touch lower, with dealers pointing to doubts over Greece's ability to make good on a promise it would reach a cash-for-reforms deal with its euro zone partners by Sunday.

Oil markets were almost 1 percent higher, while prices of German government bonds, a safe haven for money in the euro zone looking for refuge from the Greek worries, rose.

The dollar spent much of April and May in its roughest patch since the start of a rally last year that has changed the playing field for business and financial investors worldwide.

It fell as much as 9 percent against the euro between April 13 and May 15 but has recovered more than half of that loss in the past week after U.S. Federal Reserve chief Janet Yellen affirmed her willingness to raise interest rates this year.

"The dollar remains a buy, even if it is not so wise to buy it against the euro," analysts from French bank Societe Generale said in a note to clients.

"If we get some kind of Greek deal ... it will not get rid of long-term concerns, but it would trigger a bounce in the euro. So we would rather be long of the dollar against the yen, pound and Aussie and Canadian dollars."

On Friday, the dollar rose 0.05 percent on the day against a basket of currencies and 0.2 percent lower against the euro at $1.0966 .

Earlier, Asian shares had risen as Chinese shares edged back from the previous day's dizzying plunge, though regional investors remained fearful that the world's best performing equity market was at the beginning of a major correction.

Buoyed by China, Australia and South Korea