LONDON (AFP) - The European single currency bounced to an eight-week peak against the dollar on Friday, boosted by fears for the health of the United States economy, dealers said. In earlier Asian trading, the euro rallied as high as 1.2722 the highest level since May 12. It later pulled back to stand at 1.2667 dollars, from 1.2700 dollars late in New York on Thursday. Against the Japanese currency, the dollar increased to 88.58 yen from 88.31 on Thursday. This has been a stunning turnaround in the euros fortunes, but it is one that is reliant on the current fear of a double-dip in the United States, said Credit Agricole CIB analyst Daragh Maher. There may be no immediate candidates on the data front to refute this pessimism, but we believe that the euro is setting itself up for another fall even if does not look likely to happen in the next couple of days. After plumbing the latest euro low, however, the US currency clawed back ground on renewed market confidence about global economic growth. Pessimism on the global growth outlook eased, NAB Capital strategist John Kyriakopoulos noted. The dollar retraced ground as fears of a double-dip recession in the US were calmed by a surprise decline in initial jobless benefits and a quickening of retail sales in June, he added. The US Labor Department said Thursday that new claims for US unemployment benefits dipped more than expected last week. Initial claims fell to 454,000 in the week ending July 3 from the previous weeks revised figure of 475,000, the department said. Most economists had expected the latest weekly figure to be around 460,000. Sentiment was also boosted after the IMF upgraded its 2010 global economic growth forecast on Wednesday to 4.6 percent from 4.2 percent. CMC Markets analyst Michael Hewson said the euro in addition won support from soon-to-be-released stress tests for eurozone banks. On Thursday, European Central Bank head Jean-Claude Trichet welcomed the tests, which will reveal whether eurozone banks can withstand a crisis similar to that sparked by the collapse of US investment bank Lehman Brothers in 2008. Trichet made the comments after the ECB held its key interest rate at a record low 1.0 percent amid deep concern about the health of banks that have become dependent on ECB funds. The euro has continued its recent surge higher on the back of renewed optimism about the banking system, and the outcome of the forthcoming European stress tests, but also on the back of a significant recovery in both German imports and exports for May, said Hewson. In trading in London on Friday, the euro was at $1.2667 against 1.2700 dollars on Thursday, at 112.22 yen (112.15), 0.8342 pounds (0.8370) and 1.3366 Swiss francs (1.3319). The dollar stood at 88.58 yen (88.31) and 1.0551 Swiss francs (1.0487). The pound was at 1.5185 dollars (1.5168).