FOREX-Dollar boosted by Citi earnings but fears remain

* Dollar rises as Citi reports smaller-than-expected loss

* Euro capped as Trichet notes risks to growth

* Broad dollar sentiment still clouded by financial woes

(Recasts, updating prices and comment, changes dateline, previous LONDON)

NEW YORK, July 18 (Reuters) - The dollar rose against a basket of six major currencies on Friday, boosted by news Citigroup Inc. (C.N: Quote, Profile, Research, Stock Buzz) posted a smaller-than-expected loss in the second quarter, further calming fears about the health of the U.S. financial sector.

The results from Citi, the largest U.S. bank, add to positive earnings news from other banks such as Wells Fargo & Co. WFC.N and JP Morgan Chase & Co. (JPM.N: Quote, Profile, Research, Stock Buzz) earlier this week.

As well as injecting fresh impetus into the dollar, Citi's results increased optimism in the stock market.

"Citi earnings have encouraged the market to take on more risk and given (the dollar) a lift," said Stephen Malyon, senior currency strategist at Scotia Capital in Toronto. They were "consistent with other bank earnings seen earlier this week which has turned sentiment around on the dollar a little bit."

The dollar also benefited from sharp falls in sterling after the Financial Times reported the UK Treasury is working on plans to change its fiscal rules.  Continued...