Dollar falls, economy recovery hopes grow

LONDON (Reuters) - The U.S. dollar fell to a four-month low on Wednesday, its safe haven appeal eroded by optimism about a global economic recovery and concerns about the United States' fiscal health.

Oil prices neared $60 a barrel and helped energy shares.

World stocks as measured by MSCI gained 0.2 percent after two consecutive days of moderate losses.

The dollar hit a four-month low against a basket of currencies and a seven-week trough versus the euro.

Traders said the dollar also came under pressure due to an article in the Financial Times that touched on the risk of the United States losing its triple-A credit rating and refocused attention on rising U.S. debt issuance.

A recent recovery in risk appetite across financial markets has left the U.S. currency vulnerable.

"The focus turned toward topics that are negative for the United States such as the fiscal deficit," said chief foreign exchange strategist for Daiwa Securities SMBC.

The dollar index, which measures its performance against a basket of six currencies, hit a four-month low of 81.871 but was later at 82.08 down 0.3 percent.

Reflecting the gradual return in confidence, the three-month dollar London interbank offered rate (LIBOR) marked a record low of 0.906 percent on Tuesday.

In early London trading on Wednesday, interbank lending rates slipped again.

VOLATILITY EASES

Equity markets were flat to higher, with the pan-European FTSEurofirst