By Kevin Buckland

TOKYO (Reuters) – The dollar wallowed near its lowest level in a week versus major peers on Friday, as improved risk sentiment wiped out recent gains amid easing concerns about contagion from a potential China Evergrande Group default.

Risk appetite returned, lifting oil and global equities, even as hawkish comments from the Bank of England pushed up yields globally, with those on 10-year U.S. Treasury notes hitting the highest since July overnight at 1.437%.

That failed to help the greenback though, with the U.S. Dollar Index, which measures the currency against a basket of six rivals, easing slightly to 93.068 from Thursday, when it slid 0.36% and touched the lowest since Sept. 17 at 92.977. That erased gains for the week, and set the index up for a 0.16% decline.

“Risk sentiment was unperturbed by the move in yields, instead taking its lead from news around Evergrande,” Tapas Strickland, an analyst at National Australia Bank, wrote in a client note.

“Chinese authorities are readying restructuring teams, alleviating fears of a Lehman’s-type moment.”

Beijing injected fresh cash into its financial system on Thursday, as embattled property giant Evergrande announced it would make interest payments on an onshore bond. There has been no word yet, however, on whether it also made coupon payments on dollar bonds due that day, with more due next week.

Even so, the mood improved, weighing on other safe havens like the yen and lifting commodity-linked currencies like the Australian dollar.

The yen eased 0.05% to 110.385 per dollar after earlier hitting 110.435, its weakest level since Sept. 8.

The euro added 0.05% to $1.1743, continuing to rebound from a more than one-month low of $1.16835 reached Thursday.

The Aussie rose 0.21% to $0.73105, and earlier touched a one-week high of $0.73165.

Meanwhile, sterling was 0.07% higher at $1.3734, approaching the previous session’s high of $1.3750, a first since Sept. 20.

The BOE said two of its policymakers had voted for an early end to pandemic-era government bond buying and markets brought forward their expectations for an interest rate rise to March.

Norway’s crown was little changed at 8.5754 per dollar after jumping to a 1-1/2 month high of 8.5552 on Thursday, after the country’s central bank raised its benchmark interest rate and said more hikes will follow in the coming months.

A day earlier, the Federal Reserve said it could begin reducing its monthly bond purchases by as soon as November, and that interest rates could rise quicker than expected by next year.

“The hawkish soundings from the BOE and Norgesbank reinforce the hawkish tilt in the Fed’s dot plot,” said NAB’s Strickland.

“The Bank of England appeared to open the door to an interest rate hike before the end of the year.”

Several Fed officials are due to speak on Friday, including Chair Jerome Powell, who gives opening remarks at a Fed Listens event.

(Reporting by Kevin Buckland; Editing by Christopher Cushing)