* Euro hits 1-week high vs dlr after above-forecast EZ PMIs
* German services, French manufacturing sectors expand
* Yen gains, hits 1-mth high vs dlr
* Trader cite reports China may tighten bank capital rules
By Jessica Mortimer
LONDON, Aug 21 (Reuters) - The euro rose to a one-week high against the dollar on Friday after stronger-than-forecast surveys on the euro zone manufacturing and services sectors strengthened the view the region is on the path to recovery.
A provisional purchasing managers' poll revealed the decline in the euro zone's dominant services sector almost came to a halt in August and businesses' expectations for the future soared to their highest level in more than two years..
Earlier regional surveys showed a jump in output and expanding order books pulled Germany's private sector out of an 11-month slide and returned it to growth in August, while the French manufacturing sector grew for the first time in 15 months.
"The PMIs are slowly but surely pushing up and this has helped the euro and shares a little," said Neil Mellor, currency strategist at Bank of New York Mellon.
"But some of the positive data recently has not been evoking big reactions and there are still a lot of risks around the corner," he added.
The euro rose 0.3 percent against the dollar to a one-week high of $1.4303, while it pared some losses against the yen to trade down 0.1 percent at 134.05 yen.
The single currency also hit a near one-month high against sterling of 86.74 pence.
The PMI surveys helped give a boost to European shares, which erased earlier losses to turn 0.1 percent higher.
The yen gained ground against the dollar, however, hitting a one-month high, with traders saying sentiment was dented by earlier reports that China's banking regulator -- concerned record lending could lead to a spike in bad loans -- may tighten banks' capital rules..
The dollar fell 0.4 percent against the yen to 93.78 yen, having hit a one-month low of around 93.47 on EBS trading systems.
The dollar is on track for its second consecutive weekly close lower against the yen, the first time in two months that this has happened.
"If there is now a sense that the authorities are tightening regulations, it sends a negative message for the stock market but also it could restrain the economy," said Mitul Kotecha, global head of FX strategy at Calyon in Hong Kong.
Elsewhere, the Australian dollar dipped 0.2 percent to $0.8291, but it was off an earlier low of $0.8216.
Traders said the currency pared earlier losses after the Australian government said it had removed interest withholding tax on government bonds to make them more attractive.
Later in the session, market players will be watching for a speech by Federal Reserve Chairman Ben Bernanke at Jackson Hole. (Additional reporting by Masayuki Kitano in Tokyo; editing by Chris Pizzey)