* Greek cabinet unveils $6.49 bln budget-cutting plan
* Euro edges higher, but sentiment remains fragile
* U.S. service sector expands; ADP shows 20,000 job losses (Updates with U.S. ISM data, adds quote, updates prices)
By Wanfeng Zhou
NEW YORK, March 3 (Reuters) - The euro rose against the dollar on Wednesday after Greece pledged $6.5 billion in pay cuts and tax increases to reduce its deficit, easing worries about the country's debt crisis.
The euro gained roughly half a U.S. cent after Greece's cabinet approved a sweeping new austerity programme on Wednesday, but sentiment remained fragile as markets were wary over whether the package would be enough for Athens to win financial support from Germany and France. For details, see [ID:nLDE622155]
"If the Germans and the French offer support for Greece, the sense of crisis may lift from the markets, and the euro/dollar could see a short-covering relief rally over the next several weeks," said Boris Schlossberg, director of currency research at GFT in New York.
In mid-morning trading, the euro was 0.3 percent higher on
the day at $1.3651
The dollar fell 0.1 percent to 88.65 yen
U.S. private employers shed 20,000 jobs in February, fewer than the 60,000 jobs lost in January, data showed on Wednesday. A separate industry report showed the U.S. services sector grew in February at its fastest pace in more than two years. [ID:nN03225657] and [ID:nN02164233]
"The economy is very slowly improving, and this will over time support the dollar," said Joseph Trevisani, chief market analyst at FX Solutions in Saddle River, New Jersey. (Additional reporting by Nick Olivari; editing by Jeffrey Benkoe)