FOREX-Euro eyes record peak vs dlr as rates seen steady

(Changes byline, updates prices, adds quotes)

By Simon Falush

LONDON, April 15 (Reuters) - The euro came within half a cent of record highs against the dollar on Tuesday as European policymakers reiterated a hawkish monetary policy stance and jitters on the health of the U.S. economy persisted.

Those jitters, and fresh doubts about credit markets, are overshadowing support for the dollar from the Group of Seven financial leaders' strongest expression in seven years about volatility in major currencies, traders said.

The euro meanwhile was boosted by the European Central Bank's continued inflation focus, which analysts reckon will prevent it from cutting rates for a few more months.

ECB Executive Board member Juergen Stark and Governing Council member Miguel Angel Fernandez Ordonez stressed the bank's commitment to price stability in separate comments on Tuesday.

The head of Germany's ZEW economic institute said he would recommend the ECB not to lower rates this year after the current conditions component of its economic sentiment index rose [ID:nBAE001165].

"The euro zone ... is set to remain on hold (on rates) in the near term and that's supporting the euro," said David Pais, currency strategist at Citi.

"Investors are nervous ahead of bank earnings with markets waiting to see how big writedowns are and how bad things are."

Results from Merrill Lynch MER.N and Citigroup (C.N) are due later in the week, with analysts expecting both to announce billions of dollars in bad debt write-downs.

By 1008 GMT the euro was steady at $1.5845, within sight of the record high of $1.5912 hit last week according to Reuters data, and recovering from a post-G7 low of $1.5669 EUR=.

With French EU-norm inflation jumping to a record 3.5 percent year-on-year last month, the data should keep ECB rhetoric hawkish, analysts say.

ECB President Jean-Claude Trichet and Governing Council member Axel Weber attend a book launch at 1500 GMT, and Executive Board member Gertrude Tumpel-Gugerell speaks at a banking conference in Athens at 1730 GMT.

STERLING SLIDES

The dollar edged lower to 100.97 yen JPY=, and the euro also fell slightly to 159.90 yen EURJPY=.