FOREX-Dollar off 14-mth lows, rebounds on U.S. data

* Dollar index erases losses after hitting 14-month low

* Dovish U.S. Fed FOMC still minutes weigh on dollar

* U.S. data helps bolster dollar

* Comments from ECB's Trichet do not help euro

(Recasts, updates prices, adds byline)

By Nick Olivari

NEW YORK, Oct 15 (Reuters) - The dollar rose against the yen and euro on Thursday after U.S. data bolstered expectations the economy is recovering, raising optimism that U.S. interest rates will rise sooner rather than later.

Higher U.S. interest rates would increase the attractiveness of U.S. assets and heighten demand for the dollars to buy them.

European Central Bank President Jean-Claude Trichet, repeating comments that the euro was not created to be a global reserve currency, added to the dollar's allure in the short term.

U.S. data on claims for jobless benefits was not "that far from forecasts, but it was at least moving in the right direction in terms of lower unemployment," Nick Bennenbroek, head of currency strategy at Wells Fargo in New York.

The dollar was last up 1.1 percent at 90.36 yen while the dollar index, which measures the dollar against a basket of six currencies, rose 0.1 percent to 75.625.

The dollar index reached a session high of 75.765 after earlier falling to a 14-month low of 75.211 <.DXY>.

The U.S. Labor Department reported that initial claims for jobless benefits fell to 514,000 in the latest week. Markets were expecting claims of 525,000. For more see [ID:nOAT002316].

The government also released inflation data, which showed that stripping out volatile energy and food prices, the Labor Department's closely watched core measure of consumer inflation for September, which excludes food and energy, inched up 0.2 percent from August, a touch above market expectations for a 0.1 percent gain. [ID:nN14260181]

But dollar trading was not without volatility.

Goldman Sachs Group Inc posted better-than-expected quarterly results but despite beating published forecasts, they were not enough to beat the loftiest expectations and helped take away some investor appetite for risk. [ID:nN15288862]

TRICHET SPEAKS

The euro hit the day's low after European Central Bank President Jean-Claude Trichet repeated the euro was not created to be a global reserve currency.

The euro fell to $1.4844 according to Reuters data, and was last down 0.3 percent on the day at $1.4873, retreating from a 14-month high hit in earlier trade.

Sterling pared some gains but was still broadly higher on the day, prompted by short-covering after investors boosted short sterling positions that helped push the pound to a five-month low earlier this week, traders said. Sterling was last at $1.6233, up 1.6 percent.

Bank of England policymaker Paul Fisher told the Financial Times he felt more confident the central bank's asset purchase programme was working. [ID:nLE413216]

But analysts said they expected further dollar weakness after the latest minutes from the U.S. central bank's Federal Open Market Committee, which showed that some policymakers called for increasing asset purchases. [ID:nWEQ003473]

Simon Derrick of Bank of New York Mellon said reports of Asian central banks intervening to keep their currencies from appreciating had not lifted the dollar, because the market anticipated some of the dollars would be converted into euros.

Hong Kong's central bank sold HK$1.5 billion ($200 million) to keep the Hong Kong dollar within its trading band. [ID:nHKG105478]

The greenback earlier fell to 14-month lows against the higher-yielding Australian dollar and a 15-month trough versus the New Zealand and Canada dollars.

Reserve Bank of Australia chief Glenn Stevens said local interest rates would need to move towards a more normal setting as economic recovery took hold, reinforcing the view rates would be hiked for a second consecutive month in November. [ID:nSYD397384]

(Additional reporting by Wanfeng Zhou in New York and Catherine Bosley in London, Editing by Chizu Nomiyama)