* Better-than-expected German, French data boosts euro
* But it trims gains on euro zone GDP data, poor German ZEW
* U.S. retail sales, consumer price data awaited
By Jessica Mortimer
LONDON, Aug 14 (Reuters) - The euro rose for a second successive day on Tuesday, helped by better-than-expected German and French economic output data, though gains were tempered by concerns about a slowdown in the broader euro zone region.
Data showed the euro zone as a whole contracted by 0.2 percent in the second quarter, suggesting peripheral countries are faring worse than their stronger core counterparts. German analyst and investor sentiment also dropped more than forecast in August.
This caused the euro to pull away from the day's highs. However, it continued to be propped up by expectations the European Central Bank will step in next month to lower Spain and Italy's high borrowing costs after president Mario Draghi's recent pledge to do all it takes to preserve the currency.
The euro was up 0.15 percent at $1.2350, pulling away from Monday's low around $1.2262 towards though it was off an earlier high of $1.2386.
"German numbers were a tenth better than expected and French numbers were a tenth better than expected but we know third quarter numbers are going to be worse," said Gavin Friend, currency strategist at National Australia Bank.
However, he said investors remained "quite optimistic about the Draghi plan, that it can put a cap on (peripheral bond) yields", adding that the euro could edge up to $1.2400 or $1.2450.
German gross domestic product grew 0.3 percent in the second quarter, slightly better than expectations for 0.2 percent growth, while France narrowly avoided contracting.
More gains could see the euro target chart resistance at $1.2398, the 55-day moving average, and last week's high of $1.2444.
"These were modestly better than expected numbers out of France and Germany and these days any number that does not disappoint tends to give the euro support," said Daragh Maher, strategist, at HSBC.
The euro also edged higher after a spokeswoman for Germany's constitutional court said no delay was anticipated to an expected verdict on Sept. 12 on the euro zone's rescue funds and the EU's fiscal pact. The verdict is likely to clear some of the uncertainty hanging over the euro.
U.S. DATA AWAITED
U.S. data will take centre stage later in the session. Retail sales figures for July will offer an important update on how consumer demand fared at the start of the third quarter. The U.S. will also release consumer price data..
Worse-than-expected figures would add to expectations the Federal Reserve will act to stimulate the economy, perhaps with another round of quantitative easing through bond purchases, or QE3. But some strategists caution that investors should also brace for a positive surprise.
The euro's bounce saw the dollar index dip to 82.351, retreating from a one-week high of 82.870 set on Friday.
The dollar rose against the safe-haven yen, however, and was up 0.3 percent at 78.52 yen though staying in the 78.00-78.80 range that has held since late July.
The euro rose 0.5 percent to 97.20 yen.
The euro's latest gains were particularly apparent against growth-related currencies like the Australian and New Zealand dollars. It was up 0.1 percent at A$1.1731, having gained nearly 0.9 percent on Monday, pulling away from recent record lows below A$1.16.
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