REFILE-FOREX-Dollar up on Greek aid worries, strong US data

(Fixes story link in para 3)

* Euro down, market unconvinced by parts of Greek aid plan

* Dollar rallies vs yen, helped by strong ISM report

* Aussie hit by China tightening but recovers ground (Updates prices, adds comment)

By Steven C. Johnson

NEW YORK, May 3 (Reuters) - The dollar rose against the euro and yen on growth in U.S. manufacturing and doubts about Greece's ability to honor a pledge for drastic wage cuts in return for an aid package.

After rising in Asian trade, the euro shed 1 percent and fell beneath $1.32 as markets worried whether Greece could adopt 30 billion euros of wage cuts and tax hikes in exchange for a 110 billion euro ($147 billion) emergency aid package.

Wall Street breathed a sigh of relief an agreement was reached and a safe-haven bid for U.S. Treasuries faded but currency traders worried whether Germany would secure parliamentary approval to release the money. Greece needs funds by May 19 to meet a big repayment to creditors. See [ID:nSGE64208W] and [ID:nLDE6420B1]

"For the moment, the threat of default on the part of the Greek government has been lifted, with the operative words here being 'for the moment,' said Dennis Gartman, an independent trader and author of The Gartman Letter. "More problems exist, and we should have every doubt -- a lesson drawn from history -- that Greece shall...be able to abide by newly imposed austerity measures."

The euro fell 0.9 percent to $1.3178 after rising above $1.33 earlier. Traders said downside support was seen at the one-year low around $1.3112 touched last week.

Market holidays in Tokyo and London kept trading volume a bit lighter than usual, and some traders said that exaggerated the scope of the moves a bit.

But investors remain heavily short the euro, as Commodity and Futures Trading Commission data showed on Friday, and sentiment remains bearish.[IMM/FX]

"I wouldn't be surprised to see (the euro) below $1.30 in the next three months," said Jacob Oubina, a strategist at Forex.com in Bedminster, New Jersey.

The dollar rose 0.7 percent to 94.49 yen after the Institute for Supply Management said its April manufacturing index hit a nearly six year high.

The move "encourages speculation that the Federal Reserve could move its time frame forward for tightening monetary policy while the Bank of Japan is likely to remain on hold for the foreseeable future," said Michael Malpede, analyst at Easy Forex in Chicago, making a higher-yielding dollar more attractive than the yen to global investors. [ID:nN03189741]

The Australian dollar rose 0.1 percent to $0.9255 , recovering losses suffered after China's central bank said it was lifting lenders' reserve requirement ratio by 50 basis points, its third hike of that magnitude this year. [ID:nSGE64200J]

Even with Greece securing aid, investors said there were still concerns about other indebted euro zone countries such as Portugal and Spain.

To ease concerns, the European Central Bank on Monday suspended collateral rules for Greek government debt and said it would continue to accept the bonds regardless of the country's credit rating. [ID:nLDE6420A9]

S&P cut Greece's rating to junk status last week. According to previous rules, if the two other major ratings agencies were to follow suit, banks wishing to use Greek debt as collateral for ECB loans would have had to take a significant haircut.

(Additional reporting by Wanfeng Zhou) (Editing by Andrew Hay)