By Tamawa Desai LONDON (Reuters) - The euro hovered below its year's highs against the dollar on Tuesday, taking a breather from rapid gains the previous day as investors took profits on riskier assets. But underlying risk sentiment remained intact. Better-than-expected second quarter company results, brighter manufacturing reports and stimulative policy measures have boosted hopes the global economy may have bottomed out from its worst recession in decades. That has pushed equities, oil and commodity prices higher, prompting buying of higher-yielding and commodity-linked currencies. "We are still in a wider-risk environment, but there is a bit of a disruption to that environment with some profit-taking," said Geoffrey Yu, currency strategist at UBS. "After a summer lull last month, people want to get into the risk trades," he said. Sterling touched a new nine-month high of $1.7005 earlier in the session after rising more than two cents against the dollar the previous day, before paring gains. At 0752 GMT, the dollar was little changed against a basket of currencies at 77.706 but off from 10-month lows of 77.415. The euro was down 0.2 percent at $1.4387 after hitting a nine-month high of $1.4445 on Monday. European shares were lower after hitting a nine-month high on Monday. U.S. crude oil futures were also off 1.0 percent and U.S. stock futures were down some 0.5 percent. The yen edged up against the dollar and other major currencies. The dollar was down 0.2 percent at 94.98 yen. The euro lost 0.4 percent to 136.72 yen after earlier rising as high as 137.70 yen on EBS, its highest since mid-June. AUSSIE GYRATES The Australian dollar relinquished gains made after the Reserve Bank of Australia left interest rates unchanged as expected but dropped its easing bias, backing expectations for a rate hike by the end of the year. "The RBA's comment supported market views that Australia may see a rate hike within this year," said a senior trader for a Japanese trust bank. "Hedge funds and CTAs are all in the same trade in which they buy stocks, oil and the Aussie," said the trader. The Australian dollar was flat from late U.S. trade at $0.8411, trimming earlier gains to $0.8471 on the Reuters dealing system, the highest since late September. "The end of the Aussie bull run will happen when the RBA actually raises rates, as investors take their money off the Aussie and on currencies where rates will rise next," said Neil Jones, head of European hedge fund sales at Mizuho in London. The New Zealand dollar rose to $0.6712, its highest in 10 months. | 
