* Euro recoups early losses, helped by manufacturing PMI
* Dollar gives up gains made on bin Laden death
* Analysts say market focus still on interest raets
(Updates prices, adds details, changes byline, dateline)
By Steven C. Johnson
NEW YORK, May 2 (Reuters) - The euro remained near a
17-month high above $1.48 on Monday as surprisingly strong
manufacturing data in the euro zone bolstered the chances
interest rates there could rise again to fend off inflation.
That contrasted with the situation in the United States,
where the Federal Reserve is signaling it is in no rush to
raise borrowing costs.
The dollar rose briefly and oil prices fell overnight after
U.S. forces said they had killed al-Qaeda leader Osama bin
Laden, but traders said the news was not enough to reverse the
dollar-selling trend that has pushed the currency in recent
weeks toward a record low against its major rivals. <.DXY>
"We've come a long way without a correction but there's
really no sign of anything that would pull the euro lower right
now," said Shaun Osborne, senior strategist at TD Securities.
"We might take a look at $1.50" before any correction occurs.
At this point, he said every European Central Bank meeting
carries at least the risk of a rate hike, though he predicted
authorities would stand pat this month after hiking in April.
The ECB holds its monthly policy meeting on Thursday.
"In the end it's monetary policy expectations which are the
driving force for dollar weakness," said Marcus Hettinger,
currency strategist at Credit Suisse in Zurich.
The impact of bin Laden's death was ultimately negligible
for the dollar, he said. []
The euro was last up 0.3 percent at $1.4834 <EUR=>, off a
$1.4760 session low and not far from a 17-month high just short
of $1.49 hit last week.
Traders cited demand from a UK bank and European sovereign
names but added that flows were scarce due to market holidays
in parts of Asia and in Britain.
The dollar edged up 0.3 percent to 81.45 yen <JPY=> while
the Australian dollar hit a new post-float high above $1.10
before easing to $1.0944 <AUD=D4>, down 0.2 percent.
Against a basket of six major currencies, the dollar was
trading at 73.024 after hitting 72.813 in the Asian trade, its
weakest since hitting an all-time low in mid-2008.
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Graphic on Aussie dollar http://link.reuters.com/cun39r
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A sharp fall in silver prompted some profit-taking in the
Aussie and other high-flying commodity currencies including the
Canadian dollar, which pulled back from a 3 1/2-year high
versus it U.S. counterpart. <CAD=>.
European manufacturing data continued to boost the notion
that growth in the 17-country euro zone's core economies was
strong, boosting the case for higher rates.[]
U.S. manufacturing data is due at 10 a.m. (1400 GMT).
The death of the al Qaeda leader was seen as positive for
Washington, which had been hunting him for nearly a decade.
World leaders called for vigilance towards any possible
retaliation. Analysts said such action could be positive for
the dollar if it provoked a flight to safety towards the U.S.
currency but added this was unlikely for the moment.
"An event like a retaliatory action would be dollar
positive if it affects risk sentiment. But risk as a driver of
the FX market has been much less than it has been," said Kasper
Kirkegaard, currency strategist at Danske in Copenhagen.
(Additional reporting by Naomi Tajitsu in London; Editing
by Chizu Nomiyama)
