* Q1 China GDP slightly above expectations, lifts Aussie
* Aussie surges vs dollar, scales 4-mth peak vs yen
* Stronger risk appetite weighs on dollar, helps euro bounce
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Finn
LONDON, April 17 (Reuters) - The Australian dollar rose to atwo-month high on Wednesday after Chinese economic growth beatforecasts and indicated to some investors that the worst is overfor the global economy.
The Aussie's jump encouraged some traders who have beensearching for direction recently after a lull in currencymarkets but the euro and dollar moved little, suggesting broadervolatility remained subdued.
The currency has been dogged by a dovish Reserve Bank ofAustralia but it rose above $0.72 for the first time since Feb.21, after data showed China's economy grew 6.4 percent in thefirst quarter.
The Australian dollar is sensitive to the economic fortunesof China, Australia's biggest trading partner.
"It is becoming very clear again this morning what reallymatters for the Australian dollar is China. The currency is updespite the fact that the RBA rate meeting caused negativesentiment yesterday," said Esther Maria Reichelt, an FXstrategist at Commerzbank in Frankfurt.
On Tuesday, the Aussie took a brief hit after the RBA saidit believes a cut in interest rates would be "appropriate"should inflation stay low and unemployment trend higher.
The U.S. dollar, often a safe haven, sagged against the euroafter the Chinese data eased concerns about a global economicslowdown.
The dollar index .DXY against a basket of six majorcurrencies dipped 0.2 percent to 96.846.
The euro EUR=EBS rose 0.4 percent to $1.1300, paring theprevious day's losses.
The single currency came under pressure on Tuesday afterReuters quoted four sources with direct knowledge of discussionsas saying several European Central Bank policymakers think theECB's economic projections are too optimistic, as economicweakness in China and trade tensions lingers.
The New Zealand dollar was down 0.5 percent at $0.6727NZD=D4 but the Aussie's bounce helped it pull back from a3-1/2-month low of $0.6668 plumbed earlier in the session.
The kiwi was hit after data showed New Zealand's annualinflation slowed in the first quarter, which raised the odds ofan interest rate cut in the coming months.