FOREX-Dollar slides versus euro; near 20-mth low

NEW YORK, Nov 27 (Reuters) The dollar fell to a 20-month low against the euro on Monday on continued concern that the euro zone interest rate outlook is more favorable than that in the United States.

The U.S. currency pared some of its losses after French Finance Minister Thierry Breton said it was important to be highly vigilant following the dollar's decline in the last few trading sessions and said it would be discussed by European finance ministers, who are meeting in Brussels.

''I expect to hear more comments from European officials trying to put some brakes on a rapid appreciation on the euro until the end of this meeting,'' said Greg Salvaggio, vice president of trading at Tempus Consulting in Washington. ''But chances are that the dollar slide will continue this week.'' The meeting ends on Tuesday.

In midafternoon trading in New York, the euro was up 0.3 percent on the day at $1.3130, having spiked up to a 20-month high of $1.3172, according to Reuters data.

The euro has now risen nearly 11 percent on the year, having gained around 2 percent since last Wednesday.

The euro rallied above the psychologically important $1.30 level on Friday in thin markets with analysts citing positive sentiment about the euro area's interest rate outlook compared with that of the United States and renewed concerns about dollar diversification. The euro rose to a record peak against the low-yielding yen on Monday.

With little else to focus on ahead of a slew of U.S.

economic data later this week, investors have zeroed in on comments about the euro's dramatic rise against the dollar.

Eurogroup Chairman Jean-ClaudeJuncker said on Monday he was not concerned by the current level of the euro and that a critical point was ''lengths away''.

But OECD Secretary General Angel Gurria said on Monday the euro's strength posed productivity and competition risks for Europe. He added that the dollar could drop further if the U.S.

current account deficit remains as high as it is at the moment.

The head of European employers lobby UNICE said on Monday the European Central Bank should take into account the risk posed by the strong euro currency to economic growth.

Against the yen, the euro was up 0.2 percent at 152.40 yen after hitting a record peak of 152.49, according to EBS data.

The dollar was up against the yen in volatile trade, gaining 0.5 percent to 116.07, after bouncing from a three-month low of 115.37 yen, according to Reuters data.

Sterling last traded at $1.9378, taking its gains since the start of this year to more than 12.5 percent. Earlier it hit a 2-year peak of $1.9465 before slipping back.

Investors are also gearing for U.S. economic data scheduled for release later in the week, analysts said.

''If there is any sign of an across the board (economic) softening we could see the dollar get hammered again,'' said Ron Simpson, director of currency research at Action Economics in Tampa, Florida.

In other news, Sergei Kamburov, deputy director of the Russian central bank's market operations department, told a Euromoney conference on Monday that the euro was the most important competitor to the U.S. dollar but that he did not see it overtaking the dollar.

(With additional reporting by Nick Olivari in New York).

Reuters DH VP0125