(Recasts, updates prices, adds analyst comment)
* U.S. jobless claims up, data initially weighs on dollar
* U.S. dollar outlook remains bright
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 14 The U.S. dollar recovered from early losses on Thursday in generally thin trading, boosted by gains on Wall Street as tensions eased in Ukraine and the Middle East.
A robust U.S. 30-year bond auction supported Treasuries prices in general and weighed on yields, which has ironically underpinned the greenback, analysts said.
"The general sentiment in the market is that there is no other alternative to U.S. assets right now," said Kathy Lien, managing director at BK Asset Management in New York. "So that's why you're seeing gains in U.S. Treasury debt prices, U.S. equities, and the U.S. dollar."
Ordinarily, higher Treasury prices, which move inversely to yields, are negative for the dollar because they mean lower returns for investors. But Lien said higher debt prices could be supportive of the greenback if they reflect strong demand for U.S. assets, as in the case of the 30-year bond sale earlier in the afternoon.
In late trading, the dollar was up 0.1 percent against the yen at 102.47. The dollar also recovered from losses versus the euro, which last traded flat on the day at $1.3367 .
Political worries waned on Thursday, giving stocks and the dollar a boost, after Russian President Vladimir Putin said Russia would stand up for itself but not at the cost of confrontation with the outside world, striking a conciliatory tone after months of tough rhetoric aimed at Ukraine.
Earlier in the day, the dollar tumbled to session lows against the euro after a rise in U.S. weekly jobless claims. The jobless claims data came a day after an unexpectedly flat retail sales report, which reinforced expectations the Federal Reserve would be in no rush to raise interest rates. Higher interest rates tend to enhance the dollar's appeal, as they boost the yield of some U.S. assets.
Despite weak jobless claims data, the outlook for the dollar remains upbeat, many analysts said, compared with that of the euro and yen, whose economies are still struggling. An already sluggish euro zone economy has hit a rough patch with the negative impact of the Russia-Ukraine crisis on Germany, the euro zone's largest nation.
Japan, meanwhile, remains mired in recession, with the economy contracting 6.8 percent in the second quarter. Some strategists have called for the dollar to hit 109 yen by year-end.
"The divergence in outlook between the U.S. and other industrialized economies remains a key pillar of support for the dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Dan Grebler)