NEW YORK (Bloomberg) — The dollar rose against most of its major counterparts as an unexpected drop in US retail sales increased concern the global economic recovery may not be sustainable, boosting the currency's appeal as a haven.

The greenback gained for the first time in four days versus the euro even as other data showed US consumer confidence rose to its highest level since 2008. The pound weakened against all of its major peers after UK manufacturing unexpectedly declined. Australia's dollar dropped versus its American counterpart as inflation in China fanned concern the nation may move to cool its economy.

"The market is very vulnerable to bad news," said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. "The main bad news came from the US in the form of the retail sales report. Chinese data was strong, and that's prompted fears of further policy tightening. That data mix today was negative for risk appetite."

The dollar rose 0.4 percent versus the euro to $1.2074 on Friday, still posting a weekly loss. It earlier fell as much as 0.2 percent. The greenback gained 0.3 percent to 91.60 yen, from 91.34 yen. The euro fell 0.1 percent to 110.60 yen, while gaining 0.6 percent for the week.

"The data came out and the dollar reacted accordingly," said John Doyle, a strategist at currency-trading firm Tempus Consulting Inc. in Washington. "The dollar has a bit more to go, and we're bearish on the euro."

The euro has dropped 9.6 percent this year for the worst performance among its developed-world counterparts, according to Bloomberg Currency Correlation-Weighted Indices. The dollar has strengthened 9.3 percent.

US retail sales decreased 1.2 percent in May, the biggest drop since September 2009, following a 0.6 percent April gain that was larger than previously estimated, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey was for a 0.2 percent increase last month.

"The consumer is much weaker than we thought," said Sebastien Galy, a currency strategist at BNP Paribas in New York. "People are trying to trade risk aversion. They're going to buy dollars and sell emerging markets."

The Thomson Reuters/University of Michigan index of consumer sentiment increased to 75.5 in June, the highest level since January 2008, from 73.6 the previous month.

The Australian dollar declined 0.2 percent to 84.89 US cents on Friday, the first drop in four days, as China's statistics bureau reported inflation in the nation accelerated in May to the quickest pace in 19 months, more than economists expected. China is Australia's biggest trading partner.

"Higher Chinese inflation may lead to earlier-than-expected rate hikes or revaluation of the currency," said Masafumi Yamamoto, chief currency strategist at Barclays Plc in Tokyo. "This may lead to some risk aversion, so after building long positions on the Aussie and kiwi, the news may have caused some profit-taking." A long position is a bet a currency will strengthen.

Sterling pared its first weekly gain in more than a month against the dollar as UK factory output fell 0.4 percent in April from March, the Office for National Statistics said today in London. Economists estimated it would increase 0.5 percent, according to a Bloomberg survey.