* Euro, yen, franc profit from halt in stocks rally
* Aussie dollar slides after weak jobs numbers
By Michael Connor
NEW YORK, Feb 13 (Reuters) - The dollar fell on Thursday to a two-week low against the euro and slid against other major currencies, weakened by an unexpected fall in U.S. retail sales which helped sow concerns that economic growth could be slowing.
Following the release of the weaker-than-forecast retail sales, the euro rallied to about 1.3694 against the dollar, its strongest Jan. 27 before trimming gains to trade 0.55 percent higher on the day at 1.3681 to the greenback.
"The retail numbers touched off covering of long dollar positions," said Greg Moore, senior currency strategist at RBC Capital Markets in Toronto, who added investors increasingly see alternatives to the U.S. dollar. "It's a safer world out there."
U.S. retail sales fell unexpectedly by 0.4 percent in January, signalling slowing economic growth and marking a second down month for retail sales. Some analysts attribute the drops in part to notably severe U.S. winter weather.
The unexpectedly soft retail figuresa followed data last Friday showing U.S. job creation had slowed sharply over the past two months, turning in the weakest performance in three years and raising the prospect that the economy may be losing momentum. [ID:nL2N0LC0ZF}.
Thursday's sales data also stung the dollar index, an indicator based on six currencies that had been already down more than 0.4 percent. It touched a day low of 80.194 after the report and traded off 0.37 percent at 80.380 in midday New York activity.
The dollar fell 0.32 percent against the yen at 102.215 yen . Earlier, it traded as low as 101.695 yen. Losses of 0.67 percent against the Swiss franc left the dollar at 0.8947 francs.
A strong dollar against its major currency peers was a central bet for many banks at the start of this year, convinced that a steady reduction in Federal Reserve bond-buying would drive up dollar interest rates and draw in capital.
The failure of 10-year Treasury yields to get closer to 3 percent, however, has left many traders disappointed and the major currency markets meandering.
"Today's move looks mainly like a squeeze of some of those positions put on yesterday," said Paul Robson, strategist with RBS in London.
One explanation for the generally flat performance is that a sell-off in emerging markets, the other side of a shift in global capital due to the Federal Reserve reining in monetary stimulus, has benefited other currencies as much as the dollar.
"The dollar's safe haven status has been eroded and as equities come off, the dollar index is also a bit lower," said Peter Kinsella, strategist with Commerzbank in London.
The Australian dollar, looking in better shape this month after a 10 percent slide since October, dived almost 1 percent after an unexpectedly weak domestic jobs report.
The Aussie recovered to trade at US$0.89820, or off 0.48 percent.
UBS analyst Gareth Berry argued that, with the Fed halting the flow of dollars that has propped up the Aussie over the past year, the Australian currency would now feel more impact from the two full percentage points cut off base rates since the end of 2011.
"There was minimal currency reaction to the first 175 basis points worth of rate cuts," he said. "Now the shoe is very much on the other foot, as the market reaction to the soft employment data overnight demonstrated. We look for the Aussie to drop towards $0.86 over the next three months."
- retail sales