* Greek CDS rise, bond yield spreads widen
* Euro falls most versus dollar in 3 weeks
* US initial jobless claims rise; Capital inflows rise (Adds quotes, details, update prices)
By Wanfeng Zhou
NEW YORK, April 15 (Reuters) - The euro fell for the first time in six days against the dollar on Thursday as the cost of insuring against a Greek default rose, underscoring persistent concerns about Greece's ability to service its debt.
The euro was on track for its biggest one-day fall in three weeks against the U.S. dollar as the Greek/German government bond yield spread also widened to near record levels hit before euro zone members agreed a standby aid package for Greece.
Ministers agreed on Sunday to make available 30 billion euros in loans with a further 15 billion coming from the International Monetary Fund. But uncertainty remained over how the financial assistance would be implemented.
Sentiment towards the euro also deteriorated as the cost of insuring against a Portuguese default hit its highest since February after the European Commission on Wednesday said the country may need additional fiscal cuts this year.
"The whole PIGS (Portugal, Italy, Greece, Spain) story is creeping back up," said Chris Gaffney, vice president at EverBank World Markets, in St. Louis, Missouri.
"The euro had run up the past (several) days pretty dramatically and so a pause is going to be just natural. The markets were looking for an excuse to stop the euro's ascent," he added.
The euro
Five-year Greek credit default swap prices rose to 455 basis points, exceeding a record closing high of 444 basis points hit a week ago.
Some in the market said selling by Middle Eastern names also was helping push the euro lower against the dollar, and that a break through stop-loss orders around $1.3575 and below had exacerbated losses.
BNP Paribas this week cuts its forecast for euro/dollar and now expects the pair to hit 1.19 by mid-2011, saying uncertainties about the aid package for Greece will likely keep international investors cautious about European asset markets.
The euro
Greece said on Thursday it is seeking talks with the EU, the European Central Bank and the IMF on a multi-year economic program that could be backed by financial aid if the Greek government were to seek such assistance. [ID:nATH005370].
STRONGER INFLOWS
The ICE Futures U.S. dollar index <.DXY>, which tracks the greenback versus a basket of major currencies, rose 0.4 percent to 80.536, recovering from a four-week low of 80.031 hit on Wednesday.
The dollar found some support after the Treasury Department said foreign purchases of U.S. securities rose in February as strong private sector demand helped reverse an overall capital outflow suffered during the prior month.
"The report today reflected stronger-than-expected net inflows helping to provide support for the U.S. dollar despite the fed zero interest rate policy," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a graphic on foreign holders of U.S. Treasuries, click http://link.reuters.com/teb67j ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The greenback recovered from earlier losses triggered after strong Chinese growth data ramped up speculation of a yuan revaluation, which is seen as negative for the dollar against Asian currencies. [ID:nBJL002018]
Against the yen, the dollar was off 0.2 percent at 93.03
yen
Separate data on Thursday showed a gauge of manufacturing in New York State rose to a six-month high in April, while U.S. industrial output rose less than expected in March. (Additional reporting by Nick Olivari and Steven C. Johnson; )