TOKYO, Aug 8 (Reuters) - The dollar surged across the board on Friday, hitting a five-month high against the euro and a 17-month peak against the pound as the European Central Bank's caution on the growth outlook reinforced worries of a faltering global economy.

The dollar index vaulted to its highest in more than five months, with investors and analysts saying the U.S. currency is staging a broad rebound from record lows struck earlier in the year as the global slowdown takes a toll on other major currencies.

As investors rushed back to the greenback to cover short positions, the Australian dollar also shed about 1 percent and the New Zealand dollar lost 2 percent.

'We are seeing a shift away from a focus on the U.S. to a more global problem,' said Sharada Selvanathan, a currency strategist at BNP Paribas (other-otc: BNPQY.PK - news - people ) in Hong Kong. 'The dollar is getting a boost by default.'

The ECB left rates unchanged at 4.25 percent as expected on Thursday, and while Trichet insisted inflation was still its main concern, analysts said he had little choice but to do so after a rate hike the previous month.

Instead, the currency market focused on Trichet's comments on the economy, interpreting them as a sign that the central bank is less likely to hike rates and may even reverse course and drift toward an easing bias on policy.

Trichet said growth in mid-2008 would be substantially weaker than at the start of the year and the central bank had only partially anticipated the scope of the slowdown. [ID:nL7650401]

The euro shed 0.7 percent from late New York trade to $1.5208 .

The single currency dropped as far as $1.5195 on trading platform EBS, a five-month low, with heavy selling spurred in usually placid Asia trade after it fell through key chart support near $1.5280 that had served as a base of support for the past few months.

Traders cited heavy dollar buying by model funds, hedge funds and other speculators as they rushed to unwind bets on a deeper drop.

'The market's theme is shifting toward economic conditions of each respective economy, it's no longer just about the dollar,' said a trader at a European bank.

The euro also slid against the yen, dropping 0.5 percent to 166.75 yen .

The dollar edged up 0.2 percent versus the yen to 109.61 yen , holding near a seven-month high struck this week.

The dollar index, a gauge of its performance against a basket of major currencies, jumped 0.7 percent to 75.065 <.DXY>, a 5- month high.

On Wednesday the dollar index broke above its 200-day moving average for the first time since April 2006, a move analysts said could herald a medium-term turnaround in the greenback, which has been battered by the U.S. housing and financial troubles.

The dollar repeated the feat against the euro on Friday as the single currency broke below the 200-day moving average for the first time since April 2006.

'Market participants find it easier to probe the downside when such milestones are breached,' said Takahide Nagasaki, chief forex strategist at Daiwa Securities SMBC.

Though prospects for the United States are far from bright -- Wall Street tumbled on Thursday as a big loss at insurer AIG Group fanned fears of more credit crisis fall out -- the currency market is just beginning to digest the possibility that other economies are headed for tough times as well, Nagasaki said.

The dollar's gains were broad, with the Australian dollar striking a six-month low of $0.8925 and the New Zealand dollar shedding more than 2 percent to an 11-month trough of $0.6983 on the Reuters dealing system.

Sterling slid 0.8 percent to a 17-month low of $1.9270 .

(Additional reporting by Eric Burroughs; Editing by Michael Watson)

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