* Dollar hits 14-month low vs basket but recovers
* Euro nears $1.50 but options-related selling caps gains
* Canada keeps rates steady, U.S. dollar rises vs loonie
* Officials concern high about dollar weakness
* Analysts say market still inclined to sell dollars (Recasts, updates prices, adds comment, details)
By Steven C. Johnson
NEW YORK, Oct 20 (Reuters) - The dollar hit a 14-month low against a basket of currencies on Tuesday as policymakers in Europe and Asia remarked on its decline, but rebounded after options-related buying kept it from pushing through $1.50 per euro and 90 yen.
Concern about U.S. currency weakness also prompted the Bank of Canada to leave interest rates at record lows, a move that drove the U.S. dollar nearly 2 percent higher against its Canadian counterpart.
Wall Street slipped as tame U.S. inflation data offset strong quarterly earnings from Apple, denting investor appetite to sell the low-yielding dollar for higher-yielding currencies more closely correlated with economic recovery.
That helped the greenback recover earlier losses, but analysts said it would likely remain under pressure as long as as stocks continue to rise, the global growth outlook keeps improving and the market continues to anticipate record low U.S. interest rates staying in place well into next year.
"If earnings continue to outperform, it's only a matter of time before we go higher," said Jacob Oubina, strategist at Forex.com in Bedminster, New Jersey, who said he expects the euro to clear the $1.50 barrier soon.
An index that measures the dollar against six major currencies recovered from a 14-month low at 75.103 and was last down 0.1 percent at 75.455. The euro, the biggest component in that basket, was off 0.2 percent at $1.4933 after failing to take out options barriers at $1.50. It earlier hit a 14-month high of $1.4994.
The dollar fell as low as 90.08 yen, aided by the narrowing of the U.S.-Japanese 10-year bond yield spread. It was last down 0.1 percent at 90.46 yen.
NERVOUS POLICYMAKERS
Dollar weakness has unnerved policymakers around the world, who fear their own currency strength will undermine economic recovery. Henri Guaino, a top adviser to French President Nicolas Sarkozy, on Tuesday said a euro at $1.50 is a "disaster" for European industry and the economy.
There are also growing signs that China is concerned about the domestic implications of its yuan currency peg.
China's yuan also rose against the dollar in the benchmark non-deliverable forwards market after Market News International quoted an unnamed Chinese government source calling for a reversal of the dollar's slide.
The dollar rose 1.9 percent against the Canadian dollar to C$1.0479 after the Bank of Canada kept interest rates at 0.25 percent and said Canadian dollar strength "more than fully offset" favorable economic developments.
The dollar fell to a 15-month low near C$1.02 last week.
The greenback fell 1.7 percent to 1.7350 reals after Brazil announced plans to tax overseas fixed-income and stock investment to stem recent currency strength.
But until the market hears stronger rhetoric from the likes of European Central Bank President Jean-Claude Trichet, low U.S. rates coupled with rising asset and commodity prices will probably continue to weigh on the dollar, analysts say.
"It's one thing to say you want the dollar to stop weakening, it's another to put your money where your mouth is," said Peter Frank, senior strategist at Societe Generale in London. "The market isn't there yet, and won't take notice until it hears this kind of commentary more and from higher ranking officials."
A trade-weighted measure of the euro's value against 24 major trading partners was fixed lower on Monday, but remained very close to its all-time high.
The Australian dollar climbed as far as $0.9310 after minutes from the Oct. 6 Reserve Bank of Australia meeting said it may be imprudent to keep rates very low. It later eased to $0.9262, down 0.2 percent.
(Additional reporting by Jamie McGeever in London and Gertrude Chavez-Dreyfuss in New York) (Editing by Theodore d'Afflisio)