FOREX-US dollar hits 14-month low vs euro, currency basket

* US dollar index falls to 14-month low

* Canadian dollar nears parity, hits 14-month high

* Gold hits record highs; euro hits pre-Lehman high (Updates prices, adds detail)

NEW YORK, Oct 13 - The U.S. dollar fell to a 14-month low on Tuesday against major currencies, with investors betting the United States is likely to bring up the rear in a global economic recovery led by Asia and commodity-producing countries.

The euro rose to nearly $1.49, its highest level since August 2008, just before the demise of investment bank Lehman Brothers' pushed the global banking system to the edge of collapse and sparked a frenzy of dollar buying by investors eager to dump riskier currencies.

Hopes for a stronger recovery outside the United States lifted crude oil prices to a seven-week high <CLc1> and pushed gold to a fresh record, while demand for commodity-linked currencies such as the Canadian dollar and Brazilian real remained high.

Investors fear a weak U.S. labor market and a protracted recovery will keep interest rates near zero well into 2010.

That makes holding low-yielding U.S. dollars unattractive, and any appeal the greenback has would be dulled further if other major central banks start lifting interest rates as growth picks up.

Federal Reserve Vice Chairman Donald Kohn on Tuesday bolstered the view that U.S interest rates will stay low for now, saying a tepid U.S. economic recovery meant rising inflation was not an imminent threat. [ID:nWEQ001466]

"People are optimistic about global growth in the fourth quarter and beyond, so money is coming out of the U.S. and the dollar has gone south against most majors, especially commodity currencies," said Hidetoshi Yanagihara, senior currency trader at Mizuho Corporate Bank in New York. "That should continue for awhile, especially if the Fed keeps rates where they are."

The euro was last up 0.4 percent to $1.4826 <EUR=> after earlier hitting $1.4876, the highest since August of 2008. Citigroup technical strategists said in a note to clients that $1.4968 is the next key level for the euro zone's currency.

Sterling rose 0.6 percent to $1.5889 <GBP=> while the dollar fell 0.1 percent to 89.78 yen <JPY=>.

The dollar also hit a 14-month low against its Canadian counterpart at C$1.0268 <CAD=> before recovering to C$1.0360, a touch above Monday's closing level in New York.

Canadian Prime Minister Stephen Harper Tuesday became the latest official to register concern about the strength of the Canadian dollar, known as the loonie. Analysts say a move to parity may provoke Canada to intervene to weaken its currency.

An index measuring the dollar against a six major currencies touched its lowest level in 14 months <.DXY>.

CORPORATE EARNINGS, DOLLAR RHETORIC

Big corporate names due to post earnings this week include JP Morgan Chase & Co <JPM.N> on Wednesday, and Goldman Sachs Group Inc <GS.N> and International Business Machines Corp <IBM.N> on Thursday. [SP500/WK] [RESF/US].

Strong results could further whet investors' risk appetite, adding to dollar weakness.

The Fed will release minutes from its September policy meeting on Wednesday, and investors will scrutinize the text for clues on when the central bank will tighten the benchmark interest rate or start winding down a stimulus program that's pumped trillions into the economy.

Many investors, though, expect the U.S. government to do little to support the dollar other than issue from time to time its oft-repeated "strong dollar" mantra, as a softer currency should aid the weak economy and boost export revenues.

"The (U.S.) administration is quiet and says nothing about it, so people feel they don't desire to make any type of external stand on the dollar," said John McCarthy, director of foreign exchange at ING Capital Markets in New York.