FOREX-Dollar up on profit-taking, oil keeps it vulnerable

(Recasts, updates prices, adds comment)

* Dollar up on profit-taking, jobless claims data

* Greenback still fragile as oil prices keep rising

* High inflation, low growth raise U.S. stagflation fears

By Steven C. Johnson

NEW YORK, May 22 (Reuters) - The dollar rose on Thursday but support remained fragile as oil surged to record highs and a gloomier Federal Reserve growth forecast added to fears that the U.S. economy may be slouching toward stagflation.

Firm euro zone economic data this week and persistent inflation boosted the euro to $1.5814 overnight, a one-month high, but it retreated when investors began taking profits.

A report showing Americans filed fewer than expected applications for first-time jobless benefits also provided a dollar boost, as it showed the U.S. labor market is "still shy of typical full-blown recession levels," said Alan Ruskin, international strategist at RBS Greenwich Capital in Greenwich, Connecticut.

But traders said the market remained focused on oil, which jumped above the $135 a barrel mark CLc1, bringing its gains for the year to 40 percent and feeding worries the United States is sliding into stagflation -- a vicious combination of rising inflation and tepid growth.