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NEW YORK, Apr 12 (Reuters) The dollar gained on Wednesday after February's US trade deficit came in smaller than expected, easing some concerns about the economy's structural imbalances.

The trade gap shrank to $65.7 billion, with imports falling 2.3 percent and trade deficit with China contracting 22.7 percent, the US Commerce Department reported. January's trade gap was revised slightly higher to a record $68.6 billion.

''It's not a big surprise. A lot of the things we were looking at such as lower oil prices and higher Boeing deliveries have all conspired to make it a better number,'' said Richard Franulovich, senior currency strategist at Westpac Banking Corp. in New York.

Markets had expected a shortfall of $67.5 billion.

''This should improve dollar sentiment ... as it alleviates a lot of the structural concerns about the dollar,'' Franulovich added, alluding to the large US trade and budget deficits.

The euro fell to session lows against the dollar around $1.2067 after the trade report, from about $1.2020 shortly prior. The dollar rose to session highs against the yen at 118.48 yen from about 118.15 yen before the data.

Against the Swiss franc, the dollar gained 0.3 percent to 1.3015 francs. Sterling was flat at $1.7491.

Analysts attributed the lower deficit to factors such as the Chinese new year, which reduced Chinese exports. China has reported an $11 billion trade surplus for March, analysts say, and this should be reflected in US trade data for March.

''In the next several months we might see some record highs in the trade deficit with the rise in oil prices as well,'' said Brian Garvey, senior currency strategist at State Street Global Markets in Boston.

The Federal Reserve's dollar-supportive credit tightening cycle is expected to end soon, and this, along with the huge US deficits and the massive amounts of foreign capital needed to plug them, could weigh more heavily on the dollar.

Growing geopolitical concerns have also undermined the dollar in recent sessions after Iran announced it had joined the group of countries possessing nuclear technology.

Tensions over oil-producer Iran also pushed oil prices above $69 per barrel, closer to last year's record peak.

REUTERS SBJ HS2112