* Euro/dollar hits 1-mth high, retreats on profit taking
* Losses limited, shares, data boost econ recovery view
* Bank stress test result concerns may cool risk demand
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LONDON, May 5 (Reuters) - The euro slipped on Tuesday, pulling back from a one-month high hit against the dollar in early trade as profit taking set in, while markets awaited the results of U.S. bank stress tests later this week.
Losses were limited in the euro and other currencies perceived to be higher-risk given a rise in European shares. Analysts said recent economic data has bolstered hope that the global downturn may be petering out.
The euro rose as high as $1.3439 on electronic trading platform EBS, its highest since early April, before dropping to around $1.3335 by 0800 GMT, down around 0.4 percent on the day.
European shares .FTEU3 rose 0.5 percent in early trade.
"Risk is still on, that's the general theme," said Martin McMahon, currency strategist at Credit Suisse in Zurich. "It's general confidence that the recovery is coming everywhere. All of the data is coming through moderately positive."
Data this week showing improving manufacturing in Europe, China and India, and an unexpected rise in U.S. existing homes sales added to the argument that the global economy may have past the worst after months of intense weakness.
But analysts said the risk rally seen over the past month may be cut short if stress tests results due on Thursday show U.S. banks may need significantly more capital to deal with ongoing weakness in the global financial system.
A source told Reuters about 10 banks would be told they needed to increase their capital cushions. [ID:nN04395186]
The dollar index .DXY rose half a percent higher to around 84.064. The euro's retreat against the U.S. currency helped the dollar to recover from 83.600 hit against a basket of currencies on Monday, the first time since late March.
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