FOREX-Dollar remains near record low

(Recasts with reaction to US data, updates prices, adds comment, changes byline, changes dateline, previous LONDON).

NEW YORK, Feb 28 (Reuters) - The dollar fell to a record low versus the euro on Thursday as weak U.S. economic data fuelled recession fears and raised expectations that Federal Reserve Chairman Ben Bernanke will cut interest rates again.

U.S. fourth quarter gross domestic product was revised lower and surprisingly big jump in initial weekly jobless claims added to concern about the economy and increased the likelihood of rate cuts. For details, see [nN27351421] and [nN27483655].

"This points to continued slowdown in employment which will fuel concerns about a recession here in the U.S. and certainly adds to the camp of data that is clearly dollar-negative," said Omer Esiner, market analyst at Ruesch International, Washington. "This also reinforces expectations of aggressive policy easing from the Fed and makes the dollar vulnerable."

Early morning in New York, the euro was little changed at $1.5120. The economic data spurred a brief run to a record high at 1.5147, according to Reuters data.

The dollar index, which tracks its performance against six major currencies, was down 0.1 percent at 74.168 .DXY, just above a record low of 74.041 touched after the release of the U.S. data.

The dollar was down 0.3 percent against the yen at 106.04 yen JPY=.

Analysts said that while the euro had paused from Wednesday's sharp rally above the key $1.50 barrier, the single currency still had the upper hand.

"Sentiment is still very much against the dollar in the very short term, but what we've seen is a reluctance to chase what is a very strong trend," Credit Suisse market strategist Adam Myers said.

The euro has surged nearly 5 percent in roughly three weeks and investors see plenty of scope for further strength.

"In the current environment, it seems that only a clear worsening of market sentiment and a steep fall in equity markets or surprisingly weak euro zone data could stop momentum in euro/dollar," said Commerzbank in a note to clients.

The Fed has cut its benchmark overnight lending rates by 2.25 percentage points since mid-September to 3 percent, while the ECB has kept its main rate at 4 percent.

Bernanke signalled further rate cuts to avert a recession during his Congressional testimony on Wednesday, making clear that the U.S. central bank was more worried about risks to growth than inflation. He will continue testifying later on Thursday, when he addresses the Senate Banking Committee. [ID:nN27437254]

All 15 Wall Street dealers surveyed in a Reuters poll on Wednesday expected a March rate cut and saw the Fed bringing interest rates lower than previously thought. [FED/R]

By contrast, the euro found support from comments by ECB Governing Council member Axel Weber, who said on Wednesday that market expectations for the European Central Bank to cut rates failed to take into account the dangers of higher inflation.

The market showed a muted reaction to remarks by Bank of Japan board member Atsushi Mizuno, who expressed doubts about the effect that any interest rate cut might have in supporting the Japanese economy, which he said was at a standstill.

Japan's vice finance minister for international affairs, Naoyuki Shinohara, said the Group of Seven industrialized nations is closely monitoring the global financial market turmoil and stands ready to take action to enhance stability in the market. (Additional reporting by Gertrude Chavez-Dreyfuss in New York and Veronica Brown in London) (Reporting by Nick Olivari; Editing by Tom Hals)