The dollar fell against the euro on Monday, erasing earlier gains, as investors looked past a United States versus China trade dispute and took on more risk.

U.S. stocks pared losses .N, illustrating higher risk appetite and reducing safe haven demand for the dollar, as investors stuck to the theme of recent months of changes in risk tolerance driving dollar action.

The euro recovered from losses and moved into positive territory against the dollar on buying of the euro against the pound, said Kathy Lien, director of currency research at GFT Forex.

The move into the euro at the expense of sterling, followed a Moody's report, Lien said, where the ratings company said their outlook for UK banks remained negative with a negative credit outlook for the next 12 to 18 months reflecting a weakness in domestic economic environment. [ID:nWLA3261].

The correction in the euro (this morning) should not be mistaken for a dollar bottom, said Lien.

The euro was up 0.5 percent on the day at $1.4644 EUR after going as high as $1.4652. The euro rose 0.7 percent against the pound to 0.8805 EURGBP.

Sterling fell 0.2 percent against the dollar GBP to $1.6624.

The dollar index, the dollar against a basket of six currencies .DXY, was last little changed at 76.605 after initially rising for the first time in seven sessions at current prices. (Additional reporting by Naomi Tajitsu in London) (Reporting by Nick Olivari; Editing by Diane Craft)