* Euro pushes higher vs dollar on Fed easing view
* Dollar reverses gains made on Geithner comments in WSJ
* Traders cite Asian demand boosting euro vs dollar
(Adds comment, updates throughout)
By Naomi Tajitsu
LONDON, Oct 21 (Reuters) - The euro rose against the dollar on Thursday as investors piled into the single European currency in the belief that the interest rate differential with its U.S. counterpart will continue to widen.
The dollar relinquished gains made earlier in the day as investors reckoned comments from U.S. Treasury Secretary Timothy Geithner ahead of a G20 finance ministers meeting may not have warranted a brief jump in the U.S. currency.
The dollar stayed under broad selling pressure, hovering near a 15-year low against the yen as it continued to take a beating on speculation the Federal Reserve may implement more dollar-negative quantitative easing next month.
Expectations of more Fed easing have driven three-month interbank dollar rates lower. At the same time, euro zone rates have risen to their highest since July last year, widening the spread between the two.
Some analysts said this widening spread, which indicates U.S. and euro zone rates are expected to diverge further, was helping push the euro higher.
"The majority of the market sees a positive interest rate differential in the euro given the difference in euro and dollar money market rates," said Stephen Gallo, head of markets analysis at Schneider Foreign Exchange.
"There is an ongoing diversification away from the dollar, and that's increasing demand for euros," he added.
By 0956 GMT, the euro had climbed 0.5 percent on the day to a session high of $1.4050 on Reuters data, recovering from a slide to $1.3874 in earlier trade.
Traders said Asian demand was helping to boost the single currency in early European trade.
Analysts said some emerging market countries may be allowing their currencies to appreciate versus the dollar to avoid being singled out as currency manipulators at the G20 meeting, and were likely to be offsetting that rise by buying euros.
G20 IN FOCUS
Speculation of a grand bargain by the G20 to rebalance the global economy is swirling before finance and central bank chiefs meet on Friday in South Korea to discuss a common path on managing currency, trade and economic imbalances. G20 leaders will meet in Seoul next month.
But traders said an agreement on currencies was unlikely this week given the ongoing race for some countries to weaken their currencies, and that the market was positioned for more dollar selling heading into the meeting.
The dollar index slipped 0.2 percent to 77.034, staying near a 10-month low of 76.144 hit last week.
The dollar fell as low as 80.93 yen on Reuters data, pulling back from the day's high of 81.82 yen and closing in on 80.84 yen hit on Wednesday, its weakest since mid-1995.
The market is wary that Japanese authorities could intervene to slow the yen's rise again, after they did so on Sept. 15, selling yen for the first time in more than six years.
The dollar reversed gains made after the Wall Street Journal quoted Geithner as saying major currencies were roughly in alignment and that he would use the G20 meet to advance efforts to rebalance the world economy and move toward norms on currency policy.
Investors initially took his comments as a cue to buy the dollar, but analysts argued Geithner's comments did not mark a significant change in U.S. forex policy, adding that this explained the pullback in the U.S. currency's gains. "What Geithner said was not targeted at the U.S. dollar. He was making his position clear before the G20 that the U.S. would not fight everybody on FX, just China," said Ulrich Leuchtmann, currency strategist at Commerzbank in Frankfurt. (Editing by Catherine Evans)