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NEW YORK, Sep 21 (Reuters) The dollar fell broadly on Thursday after the Federal Reserve left interest rates unchanged for a second consecutive policy meeting and indicated inflation risks were moderating.

U.S. data that showed a small rise in weekly jobless claims had no impact on the dollar, which fell for the third day in a row against the yen, while the euro was on track for its largest daily gain versus the greenback in a month.

The Fed voted on Wednesday to keep the federal funds rate at 5.25 percent, where it has held since June after rising at 17 consecutive meetings in two years.

There was little doubt among investors that the Fed would leave rates unchanged, but the bank's post-meeting statement did strike many initially as being a tad more hawkish than expected.

While the Fed may not have signaled that an easing in rates was in the cards, it also did not suggest more rate rises were needed as inflation was moderating.

''After digesting what's going on, the fact that the early- to mid-2007 rates are being adjusted downward on the futures in the States, what we're looking at is ... an interest rate play,'' said Tim O'Sullivan, chief trader at Forex.com in Bedminster, NJ.

''The fly in the ointment though is the interest rate play against the yen. Euro versus yen, dollar versus yen is possibly a tough trade if the dollar does trade down,'' he said.

The Fed noted several reasons to expect inflationary pressures to ''moderate over time'' but made clear this was a forecast and not yet reality, holding out the possibility of higher rates if needed.

''I guess that if you are looking at overall Fed policy risk going forward and you are looking at the potential for a rate cut or at least no more rate hikes -- then you could take some comfort from them reaffirming this moderation story,'' said Ian Gunner, head of foreign exchange research at Mellon Bank in London.

In early trade in New York, the dollar was down 0.5 percent against the yen at 116.79 yen.

The euro gained 0.4 percent to reach $1.2736, but was down 0.1 percent against the yen at 148.75 yen.

With interest rates clearly in focus, sterling hit 10-month highs against the euro, while cable rallied back up to nudge the $1.90 level as markets geared up for a possible UK interest rate increase in November to 5.00 percent.

U.S. interest rates surpassed British rates in January this year.

But money markets are showing investors believe UK rates could reach 5.25 percent by the end of 2006.

On the U.S. data front, the government reported initial weekly jobless claims rose last week, but were roughly in line with expectations.

Later on in the session, investors will get a first glance at the state of regional manufacturing in September from the Phildelphia Federal Reserve at 12:00 p.m. (1600 GMT) and at an index of leading economic indicators at 10:00 a.m. (1400 GMT).

REUTERS PKS PM1950