LONDON: The euro turned firmer against the dollar as nervousness over the economic outlook was eased by a supportive US energy report which suggested demand was better than expected.

Dealers said risk aversion remains strong and was clearly in evidence over the past few days as a mixed set of data, especially US consumer confidence figures, prompted a flight to the safety of the dollar.

A much larger-than-expected in US energy stocks, however, pointed to growing demand in the US economy, the world's largest, reassuring investors nervous at the possibility that the green shoots of recovery might wither.

In late London trade, the euro was at 1.4243 dollars, up from 1.4102 dollars earlier and from 1.4132 dollars in New York late on Tuesday.

The dollar also fell to 93.83 yen from 94.70 yen late Tuesday.

The early weakness in the euro reflected further heavy losses on the Chinese stock market where investors are worried Beijing may rein in some of its massive economic stimulus programme.

If it does, the knock-on effect in Asia, where Japan has just come out of recession, could be serious, perhaps dampening world demand too.

"The foreign exchange market is being influenced by global share prices, particularly the Shanghai market," said Yosuke Hosokawa, head of foreign exchange at Chuo Mitsui Trust Bank.

"Prospects for the global economy are still uncertain," he noted.

Chinese shares tumbled 4.30 percent on Wednesday.

Stuart Bennett at Calyon said the volatile trade of the past few days suggests the markets do not really know which direction to take, with players waiting for a clearer fix on the economy.

"It's almost certain that the global economy is through the worst phase," Hosokawa said. "Now we are at the next stage, where we will see a zigzag trend for the time being before reaching a full recovery."

In London on Wednesday, the euro was changing hands at 1.4243 dollars against 1.4132 dollars late on Tuesday, at 133.64 yen (133.85), 0.8614 pounds (0.8533) and 1.5165 Swiss francs (1.5200).

The dollar stood at 93.83 yen (94.70) and 1.0647 Swiss francs (1.0753).

The pound was at 1.6535 dollars (1.6579).

On the London Bullion Market, the price of gold rose to 943 dollars an ounce from 935 dollars an ounce late on Tuesday.