LONDON (AFP) - The euro rose against the dollar on Wednesday on renewed risk appetite following a rosier outlook for the European banking sector, dealers said. In late morning trading here, the shared eurozone unit climbed to 1.3006 dollars, up from 1.2996 dollars in New York late on Tuesday. Against the Japanese currency, the dollar gained to 87.91 yen from 87.87 yen on Tuesday. The euro has risen against both the dollar and the yen ... as improving demand for riskier assets continues, said Tim Lewis, analyst at online trading group Currencies Direct. Stronger risk appetite has helped keep the euro and the dollar in a tight range following brighter earnings from European banks and upbeat sentiment about what were seen as positive regulatory developments. Controversial stress tests to gauge the health of European banks last week gave most a clean bill of health despite misgivings about their stringency. Better-than-expected profits from Switzerlands biggest bank UBS and Germanys Deutsche Bank combined with news that the Basel Committee on Banking Supervision had relaxed some of its proposals for capital requirements, boosting sentiment. But news of sagging US consumer confidence have shown that challenges remain for the global economic recovery. The... mid-summer party was going so well. Then July US consumer confidence had to go and ruin the vibe, said RBC Capital Markets Senior Currency strategist David Watt in a research note. Minoru Shioiri, senior dealer at Mitsubishi UFJ Morgan Stanley Securities, also said the euros further advancement was unlikely in light of remaining worries about the European financial sector and economy. Players cannot find any reasons to continue accumulating euro-holdings, he said. Meanwhile the eurozone debt crisis weighed on bank lending in the second quarter of the year, the European Central Bank said on Wednesday, even though mortgage lending showed a strong increase in June. In its quarterly lending survey of 120 eurozone banks, the ECB said a net 11 percent reported having tightened credit standards for businesses, up sharply from a net 3.0 percent in the first quarter of 2010. The banks own forecast for the second quarter was for a slight improvement to 2.0 percent. In trading in London, the euro changed hands at 1.3006 dollars against 1.2996 dollars on Tuesday, at 114.34 yen (114.20), 0.8341 pounds (0.8334) and 1.3773 Swiss francs (1.3782). The dollar stood at 87.91 yen (87.87) and 1.0591 Swiss francs (1.0603). The pound was at 1.5588 dollars (1.5589). On the London Bullion Market, the price of gold fell to 1,164 dollars an ounce from 1,168 dollars an ounce on Tuesday.