FOREX-Dollar keeps gains on U.S. payrolls, Trichet

                                
 * Dollar holds most of gains made after U.S. payrolls data
                                
 * Euro recovers a tad on profit-taking
                                
 * Euro stays under pressure after Trichet's comments
                                
 * Focus shifts to next week's G8 summit
                                
 By Satomi Noguchi
                                
 TOKYO, July 4 (Reuters) - The dollar steadied on Friday,
keeping most of the sharp gains made against the euro the
previous day after payrolls data came in close to expectations
and eased some fears about the health of the U.S. job market and
economy.
                                
 The U.S. currency also climbed against the euro on Thursday
as European Central Bank President Jean-Claude Trichet cooled
speculation of more interest rate hikes.
                                
 After the ECB raised rates on Thursday to 4.25 percent from 4
percent in a widely expected move to get record euro zone
inflation back under control, Trichet said he had "no bias" on
monetary policy. [ID:nL0323441]
                                
 In the wake of that remark, fewer economists in a Reuters
poll forecast that euro zone rates would hit 4.5 percent this
year. [ID:nL03498120]
                                
 The euro trimmed losses against the dollar as some investors
bought the single European currency back to book profits in quiet
trade with U.S. markets closed on Friday for the Independence Day
holiday.
                                
 Analysts said the dollar would likely hold firm in the near
term as investors shift focus to the outcome of a meeting of
leaders from the Group of Eight rich countries in Japan next
week.
                                
 "A sharp rise overnight in the dollar against the euro
reflects how steeply the market had bet on the dollar's fall and
how badly those players were hurt," said Kengo Suzuki, a currency
strategist at Shinko Securities in Tokyo.
                                
 The euro <EUR=> edged up 0.1 percent from late U.S. trade on
Thursday to $1.5717 after dropping to a one-week low of $1.5673.
It had fallen on Thursday from a high above $1.5900 and posted
its biggest one-day drop since late April.
                                
 The dollar was little changed at 106.73 yen <JPY=>.
                                
 G8 LOOMS
                                
 The focal point of next week's G8 summit will be whether the
leaders will send a message strong enough to reverse the course
of soaring oil prices and the dollar's overall slide, analysts
said.
                                
 In Asian trade on Friday, oil futures stayed near record
highs above $145 a barrel <CLc1> hit the previous day.
                                
 "Given that the dollar's moves are seen tied closely to
surging oil prices, the market needs to see the result of the G8
meeting before selling the dollar again," said Seiichiro Muta, a
director of the forex section at UBS in Tokyo.
                                
 G8 leaders will discuss concerns that a weak dollar is a
contributing factor to high oil prices when they gather in
Hokkaido, northern Japan, on July 7-9, a senior Japanese
government official said on Thursday. [G7/G8]
                                
 Climate change, along with food and fuel inflation, will be
high on the G8 agenda for discussion.
                                
 Underscoring the U.S. economy's frailty, data on Thursday
showed that U.S. employers cut workers for a sixth straight month
in June for the longest such streak since 2002. [ID:nN03454467]
 (Editing by Chris Gallagher)