* Dollar rebounds from 3-month lows versus euro, yen
* Above-forecast jobless claims cap dollar's gains
* Euro steadies after German PMI survey
(Updates market action, changes dateline, previous LONDON)
By Richard Leong
NEW YORK, May 22 The U.S. dollar rose against
major currencies on Thursday as higher U.S. bond yields revived
appeal for the greenback, while the euro recovered from recent
lows on upbeat economic data.
The dollar's gains were limited by a bigger-than-expected
rise in U.S. weekly jobless claims, while the shared currency
has remained pressure by bets the European Central Bank will
loosen monetary policy next week to avert deflation.
The yen, which had fared well on worries about the global
economy and conflict in the Ukraine, broadly underperformed as
investor sentiment improved.
The dollar index that gauges its value against the euro, yen
and four other currencies was up 0.17 percent at 80.232,
bringing its month-to-date gain to 0.95 percent.
The euro fell 0.2 percent versus the greenback at $1.3655
, recovering from a three-month low of $1.36345 on
Wednesday, while the dollar gained 0.3 percent against the yen
at 101.63 yen after hitting a 3-1/2-month low against the
yen a day earlier.
Higher U.S. Treasuries yields helped the dollar's recovery,
but analysts said it was unclear whether it could be sustained.
"It's been difficult to assess the dollar because yields
have fallen to these fairly low levels," said Sireen Harajli,
currency strategist at Mizuho Corporate Bank in New York.
U.S. 10-year Treasury yields, which have a good correlation
with the dollar/yen pair, edged up to 2.54 percent.
Last week, they hit 2.473 percent, the lowest since October.
The greenback's rise was held back by a larger-than-forecast
rise in weekly domestic first-time for unemployment benefits,
raising doubts about another month of strong payroll increase.
EURO FINDS FOOTING
The euro, while weaker against the dollar, held steady
against the yen at 138.72 yen, recovering from a
3-1/2 month low of 138.15 yen set on Wednesday.
The euro had fallen early in the London session after data
showed French business activity unexpectedly shrinking in May,
but quickly recovered ground after the German purchasing
managers' index was released.
All of which left the euro zone composite PMI for May at
53.9, bang in line with expectations, and slightly below April's
reading of 54. Still, the data pointed to quarterly growth of
around 0.3-0.4 percent, some economists said.
"True, it points to some growth, but it's not really
enough," said Peter Kinsella, currency strategist at Commerzbank
in London. "There are deflationary forces in play and we expect
the European Central Bank to cut rates next month, perhaps
negative rates too."
(Additional reporting by Anirban Nag and Patrick Graham in
London; Editing by Bernadette Baum)