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FOREX-Dollar firm after upbeat data, euro on edge ahead of Greece talks

* Upbeat US jobless data revives early rate hike hopes

* Greece appears to soften stance on bailout

* Market looks to euro zone meeting

By Hideyuki Sano

TOKYO, Feb 20 (Reuters) – The dollar held firm on Friday after upbeat U.S. jobless claims data yanked back market views in favour of an earlier rate hike by the Federal Reserve, while the euro stayed under pressure ahead of a crunch meeting on Greece’s bailout programme.

The dollar index stood at 94.396 having gained 0.2 percent on Thursday as traders put their focus back on the relative strength of the U.S. economy.

Initial claims for state unemployment benefits dropped 21,000, about twice as many as expected, to a seasonally adjusted 283,000, offering fresh evidence that the labour market was gathering steam.

The data helped to quell expectations of a possible delay in Fed rate hikes after the minutes from its last policy meeting published on Wednesday showed policy makers were concerned about hiking rates too soon.

“Although the dollar slipped on dovish Fed minutes, the market is coming to think that the minutes are a bit stale because they don’t reflect the strong (January) payrolls data,” said Osao Iizuka, chief currency dealer at Sumitomo Mitsui Trust Bank.

U.S. debt yields also rose on Thursday, helping to lift the dollar, particularly against the yen, which traditionally has a strong inverse correlation with U.S. yields.

The dollar fetched 119.05 yen, compared to Thursday’s low of 118.42 yen.

The euro traded at $ 1.1364, off Thursday’s high of $ 1.1450. It has largely stuck to a narrow $ 1.1300-1.1450 range this week, as all eyes remain on talks between Greece and the euro zone.

On Thursday, Germany rejected a Greek proposal for a six-month extension to its euro zone loan agreement, ahead of the euro zone finance ministers’ meeting on Friday.

But in a document seen by Reuters, Greece appeared to have moved substantially toward the position taken by euro zone finance ministers in negotiations on Monday that ended without a deal, as Athens vowed to ditch the 240-billion euro bailout programme.

Yields on Greek and other lower-rated euro zone bonds slid on Thursday on hopes of an agreement. Many traders, however, are taking a cautious stance as a failure to strike a deal could risk a Greek debt default and exit from the euro.

(Editing by Shri Navaratnam)

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