Forexpros – The dollar fell against the world’s major currencies on Friday as strong confidence numbers out of Germany coupled with falling yields in an Italian bond auction sparked demand for riskier but more rewarding assets like stocks over the safety of the greenback.

In U.S. trading on Friday, the euro was up against the greenback, with EUR/USD gaining 0.80% and trading at 1.3348.

German research institute Ifo reported that its Business Climate Index rose to 109.6 in February from 108.3 in January, beating out expectations for a gain to 108.8.

The reading fueled sentiment that Europe’s largest economy is moving farther along the road to economic recovery.

Meanwhile yields fell in an Italian government bond auction amid solid turnout, which fueled even more appetite for risk, especially on sentiment that European inflation rates remain in comfort zones.

The European Central Bank is scheduled to arrange EUR470 billion in three-year funds for the continent’s financial institutions in the coming days, a move designed to pump liquidity into the economy and ease a credit crunch, which further bolstered the euro on grounds that the easing move will ultimately boost confidence.

The cash injection should prolong optimism in Italian and Spanish bond markets.

Meanwhile, German and British gross domestic product growth figures remained in line with market expectations.

The dollar was stronger against the yen, however, as policymakers continue to mull ways to reverse the Japanese currency’s strengthening trend.

Meanwhile, the dollar was down against the pound, with Cable rising 0.87% to 1.5881.

The greenback was up 1.07% against the yen, with USD/JPY trading at 80.86, and down against the Swiss franc, with USD/CHF down 0.77% and trading at 0.8945.

The greenback was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.18% at 0.9988, AUD/USD down 0.04% at 1.0714 and NZD/USD up 0.10% at 0.8372.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.43% at 78.35.

A G2 meeting of finance ministers and central bankers is taking place, and talk of measures to contain the European debt crisis could resonate in currency markets.

On Monday, U.S. will release data on pending home sales.