* Sterling outperforms, other pairs stick to ranges
* Carney tells Sunday Times UK rates may rise before pay recovers
* Swiss franc, Norwegian crown ease after rallies
* Dollar steady after first weekly loss since early July
* Eyes on Jackson Hole meeting later in week
By Patrick Graham
LONDON, Aug 18 Sterling was the main mover on major currency markets on Monday, recovering from multi-month lows, while the Swiss franc retreated as investors' concerns over Ukraine eased marginally.
The dollar, knocked back last week after a strong run since early July, was roughly steady against the yen and euro and a basket of currencies used to measure its broader strength, hampered by U.S. Treasury yields that were close to 16-month lows.
The pound rose after Bank of England Governor Mark Carney said in a newspaper interview that UK interest rates may have to rise even before real wages pick up, backtracking from comments last week that suggested the opposite and prompted markets to push back bets on a first rate hike.
"The comments in the (Sunday) Times were definitely a surprise to markets and that's what is behind this move this morning," said Adam Myers, head of European FX strategy with Credit Agricole in London.
Sterling has taken a hammering over the past month, hurt by the suspicion that all of the best news on the UK economy has been priced in and that the bank might not be quite as quick as some had expected to raise rates.
After a sixth straight weekly loss against the dollar, it gained around a third of a percent against the euro and the dollar in early European deals, trading at 80.04 pence per euro and $1.6727.
Myers said the week might prove rocky for the dollar after an uncertain performance so far in August. It has failed to build on improvement which had prompted many analysts to predict the greenback was finally on for a longer run higher.
The wait for the annual U.S. meeting of central bankers in Jackson Hole, which starts on Thursday, might help hold off bigger moves this week, Myers said, but there were risks to the dollar particularly against the euro.
"After what was a very exciting July, the market has tried both ways over the past couple of weeks," Myers said.
"The euro tried several times to break out higher last week and was stopped each time around $1.34. I think the danger is we may see that (barrier) broken this week."
The euro last traded at $1.3389, flat on the day and well within the slim $1.3333-$1.3445 range seen so far this month. The dollar bought 102.47 yen, a touch more than Friday, while against a basket of currencies it edged up to 81.453.
Worries that conflict between Russia and Ukraine was set to intensify further drove a surge of money into traditional safe havens like the yen and franc at the end of last week.
That play had eased somewhat on Monday and the franc in particular fell back around a quarter of a percent against the dollar.
"While the geopolitical risk swirling over Ukraine still holds the potential of spooking global markets, it does appear as if participants are gradually becoming inured to it so long as there is no overt cross-border military operation," said Alvin Tan, a strategist with French bank Societe Generale in London.
Like Myers and several others, he warned of the potential for a squeeze on the raft of investors who have bet on further weakness of the euro on the back of the contrast bewteen broad economic weakness in Europe and a solidifying U.S. recovery.
"I don't think we're going to run away with dollar bullishness right now," said Jane Foley, a strategist with Rabobank in London.
"The position adjustment on the euro, which really you can trace back to May, has been quite substantial and I just think we may be reaching the end of that."
Data on Friday showed that speculators reduced bullish bets on the dollar in the week ended Aug. 12, net longs declining for the first time in four weeks.
The Norwegian crown, like the franc a gainer last week with the help of some more bullish domestic numbers on inflation, also eased on Monday. It was down 0.2 percent against the dollar and the euro by 1217 GMT. (Editing by Susan Fenton)