NEW YORK Reuters - The dollar edged up against the yen on Tuesday after data showed improvement

NEW YORK (Reuters) - The dollar edged up against the yen on Tuesday after data showed improvement in U.S. consumer confidence, while worries about Germany's economy and banks knocked the euro off last week's 4-1/2-month high. Asian MarketsProfit-taking on the euro's recent rise to $1.4055, its highest level since early January, also hurt the currency, but a Wall Street rally and strong U.S. data lifted market sentiment, helping it trade back near $1.40 by late afternoon.Signs of improved economic growth have kept the dollar under pressure for weeks, but selling reached a crescendo last week when investors started to worry that soaring U.S. deficits could eventually imperil the United States' AAA credit rating.Fear that foreigners would sour on U.S. government debt eased, though, after a Treasury auction of $40 billion in new two-year notes attracted solid demand."The focus on the AAA rating of the United States was overblown and was only a proximate cause of the dollar sell-off last week," said Michael Woolfolk, senior currency strategist at The Bank of New York-Mellon "We've been seeing a move into risky assets for weeks now. Nothing has really stopped that."Melvin Harris, market strategist at New York-based Advanced Currency Markets, added: "There's been so much talk about the U.S.

rating being downgraded, but to be honest, even if this happened -- and I don't think it will -- the U.S is not going to default. That shouldn't be the prompt to sell dollars."The dollar was last up 0.1 percent at 94.98 yen after earlier dipping to 94.52 yen, according to Reuters data. and European shares closed higher.That view got an added boost after the Conference Board said its U.S. consumer confidence index rose in May to 54.9 from a upwardly revised 40.8 in April. Economists polled by Reuters had forecast a reading of 42.0 for the May index."It's still a case of good news is bad news for the dollar," Woolfolk said.According to the latest data from the Commodity Futures Trading Commission, speculators increased bets in favor of both the euro and yen against the dollar to multi-month highs.Those positions are still 11 times below their all-time records, said CMC Markets analyst Ashraf Laidi, suggesting ample room for more dollar selling. Asian Markets. CAIRO (Reuters) - Two four-year-old Egyptian children have contracted the highly pathogenic H5N1 bird flu virus, raising to 76 the number of cases reported in Egypt, the state news agency MENA reported Tuesday. Swine FluEgypt has been hit harder by bird flu than any other country outside Asia and has seen a surge of cases in recent weeks.The children, a boy and girl, were from different areas of Sharkiya province in the Nile Delta region.

Both fell ill after coming into contact with birds with the virus.The avian flu virus rarely infects people, but experts say they fear it could mutate into a form that humans could easily pass to one another, sparking a pandemic.Most of those infected have previously been in contact with infected domestic birds in a country where 5 million households raise poultry as a significant source of food and income.Since 2003, the H5N1 virus has infected more than 400 people in 15 countries and killed more than 250. It has killed or forced the culling of more than 300 million birds in 61 countries in Asia, the Middle East, Africa and Europe.(Writing by Edmund Blair, editing by Tim Pearce) Swine Flu. MILAN, May 26 (Reuters) - Italy's Pirelli & C Real EstateSpA (PCRE.MI) said on Tuesday it has cut its 2009 operatingprofit target after a decision not to sell part of its assetmanagement business to focus on the unit's prospective growth. The company, controlled by Pirelli & C SpA (PECI.MI) tyregroup, said in a statement it expected a loss before interestand tax (EBIT) of between 25 million euros ($34.93 million) and35 million euros in 2009. It had previously forecast a 2009 EBIT gain of 20 millioneuros to 30 million euros, including proceeds from the sale ofa stake in the asset management unit.