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TOKYO, May 18 (Reuters) The dollar slipped on Thursday, paring gains made after European officials suggested the euro's rapid rise in the past month could stymie economic growth in the region.

The U.S. currency fell against the yen after its rise to a one-week high on Wednesday provided a plum opportunity for Japanese exporters to step in and sell the dollar.

''Exporters have been having a difficult time with yen strength, so they are eager to sell whenever the dollar rises,'' said Nobuaki Kubo, forex planning manager at Resona Bank.

Some traders said the U.S. currency was supported by the possibility that the Federal Reserve could raise interest rates in June after data showed consumer prices climbed 0.3 percent in April from a month earlier, beating market expectations.

A rate hike next month would help the dollar to maintain its rate advantage over other currencies.

But others in the market cited concerns that the central bank, after boosting rates at 16 straight meetings, could face the risk of excessive credit tightening given that economic growth is seen tapering off later in the year.

''Even if expectations remained intact for a further rate hike, concerns about heightening inflationary pressures damaging growth could put market focus back to the U.S. deficit problem and limit the dollar's rise,'' said Hideki Hayashi, global strategist at Shinko Securities, in a report.

By 0525 GMT, the dollar traded around 110.65 yen, down 0.3 percent on the day. The U.S. currency rose as far as 111.35 yen on Wednesday, posting its biggest one-day gain since last June.

The euro edged up to $1.2760 after sliding 1.7 percent to as low as around $1.27 the previous day.

The single European currency was down slightly at 141.20 yen but off the seven-week low near 140.10 yen hit on Wednesday.

The dollar rose on a round of short covering on Wednesday after a warning from French Finance Minister Thierry Breton that ''everything'' must be done to stop the euro gaining against the dollar.

Germany's economy ministry also said that an ongoing rise in the euro could harm exports.

Both sets of comments helped to put the brakes on the dollar's plummet to eight-month lows against the yen and one-year troughs versus the euro.

Government and central bank officials around the world have been cranking up their rhetoric against dollar weakness after the currency's sell-off following a meeting of the Group of Seven economic powers last month.

At the meeting, officials said that currency strength in emerging countries was adding to global imbalances.

SNOW, BERNANKE AHEAD Dealers were keen to hear what U.S. Treasury Secretary John Snow will tell the Senate Banking Committee when he testifies on international economic and exchange rate policies later in the day.

Any reference to current exchange levels or trade imbalances that appear to support a weaker U.S. currency would likely lead to dollar selling, dealers said.

Fed Chairman Ben Bernanke is also due to take questions later in the session after speaking at a Chicago Fed conference on bank structure and competition.

Fed fund futures show a 50-50 chance of a 25 basis point rise in June, which would take the overnight rate to 5.25 percent. Dealers have fully factored in the possibility that rates will be at that level by the end of the year.

REUTERS CS RS1127