* Euro hits one-week low vs dlr
* U.S. FOMC minutes awaited for insight into easing debate
* Dollar hovers around 82 yen, near 15-year lows
* Weak stocks drive down yen crosses
(Adds quote, updates prices)
By Tamawa Desai
LONDON, Oct 12 (Reuters) - The dollar rose against the euro and a basket of currencies on Tuesday on a short-covering bounce ahead of the release of the U.S. Federal Reserve's meeting minutes, but gave way versus the yen to hover near 15-year lows.
The dollar was sold sharply as market players factored in the prospect of more quantitative easing after the Fed's rate-setting meeting on Sep. 21, when the central bank said it stood ready to provide more support for the economy and expressed concern about low inflation.
But given disparity among the Federal Open Market Committee (FOMC) members over the extent of more easing, the market covered short positions as they scaled back some of their more aggressive QE expectations.
The euro fell to $1.3774, according to Reuters data, its lowest level since Oct. 5 and a further pull-back from an eight-month high of $1.4030 hit last week.
Traders said stop-losses were hit on the break of $1.3790, with a cluster of bids reported to be in place at $1.3760/80.
"The market is moving to pare back expectations of QE by the Fed," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi, adding other higher-yielding assets such as stocks and commodities were also seeing a correction.
"The Fed minutes will be crucial as we could learn more about the size of potential asset purchases." The FOMC meeting minutes are due out at 1800 GMT.
A Reuters poll of U.S. primary dealers conducted last week forecast the new round of quantitative easing would range between $500 billion to $1.5 trillion.
However, "recent commentary by (St Louis Fed President James) Bullard, as well as by the generally dovish (Fed vice chair Janet) Yellen suggests that the Fed may not go to extremes when announcing its next policy steps on 3rd November," BNP Paribas said in a note to clients.
A less aggressive tone by the Fed could trigger a further dollar bounce, traders said. The dollar rose 0.5 percent against a basket of currencies to 77.894, after hitting a nine-month low of 76.906 last week.
YEN NEAR HIGHS
But the going was heavy against the yen, with the Japanese currency gaining ground on the crosses as stock prices fell.
"The pressure is building on the yen crosses. The euro/yen pair could be due for a correction toward 110 yen," BTM-UFJ's Hardman said.
The euro fell 0.6 percent to 113.12 yen and the Australian dollar was also down 0.6 percent at 80.19 yen.
The dollar fell 0.1 percent to 81.97 yen, not far from a 15-year low of 81.37 struck on Monday.
The pair found support on buying by Japanese importers and the prospect of more yen-selling intervention by Japanese authorities which they undertook for the first time in six years on Sep. 15.
But most market players expect pressure to remain on the dollar/yen pair, with a test of 80 yen and the record trough of 79.75 yen still in sight.
Japanese Finance Minister Yoshihiko Noda on Tuesday reiterated Tokyo would take decisive steps against excessive currency moves, including intervention, after his Group of Seven counterparts made no overt criticism of Tokyo's yen-selling action at a meeting in Washington at the weekend.