Dollar steadies ahead of US data, Asia stocks

TOKYO, May 24 (Reuters) The dollar steadied on Thursday ahead of data on U.S. durable goods orders and new home sales later in the day that could reduce expectations for the Federal Reserve to consider cutting interest rates this year.

Investors will also be watching Asian stock markets after a warning about Chinese stocks from former Federal Reserve Chairman Alan Greenspan that dented the U.S. stock market on Wednesday.

''Market players will watch if there is going to be any change in stock movements today after Greenspan's remarks,'' said Minoru Shioiri, senior manager at Mitsubishi UFJ Securities' forex trading desk.

''If stock markets show nothing has changed, the dollar/yen is likely to stay within its recent range of 121.30-121.80,'' Shioiri added.

The dollar hovered at 121.60 yen, staying near a 3-month high of 121.88 hit in the previous session.

Greenspan said he feared a ''dramatic contraction'' in Chinese stocks after the recent boom, adding the run-up was ''clearly unsustainable.'' The comments come almost three months after a sharp drop in Chinese stocks on concerns about speculative investments triggered a global equity sell-off.

On Thursday morning, Japan's Nikkei share average was trading about 0.2 percent lower.

The euro was at $1.3455 after rising as high as $1.3502 on Wednesday. Against the yen the single currency was changing hands at 163.60 yen, in sight of a record high of 164.02 yen.

The U.S. currency had fallen against the euro on Wednesday after minutes from a Bank of England policy meeting and strong data on euro zone industrial orders suggested interest rates in Europe could rise more than previously thought.

Sterling was trading at $1.9861, after rallying more than 1 percent after the release of the minutes from the central bank.

Traders reacted little to the outcome of U.S.-China economic talks that ended on Wednesday with no great surprises for the markets. Washington and Beijing agreed on the need for more flexibility in the yuan, but the two sides remained divided over the pace of appreciation.

REUTERS DKS PM0651