* Euro turns lower vs dlr, 1-1/2 cents below day's high
* Dollar index off 16-month low but still weak
* USD below 200-day MA vs yen; Fed seen staying put on QE2
(Updates prices, adds quote, U.S. data, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 14 (Reuters) - The euro slipped on Thursday, undermined by concerns Greece could be forced to restructure its massive debt, although the currency's losses may be capped by a higher interest rate outlook in the euro zone.
The yen, however, continued its broad surge as investors pared short positions on the Japanese currency, which has fallen sharply the last few weeks in the wake of the G7 intervention last month.
The dollar, in particular, was badly hit by the yen's strength, especially following data on U.S. initial jobless claims, which were higher than expected in the latest week.
The greenback's losses pushed it below its 200-day moving average near 83.43 yen as investors cut sizable long positions built after the U.S. currency's speedy ascent from its record low of 76.25 in March.
"Overall, in terms of the euro, we have seen a return of the risk premium on some of the periphery debt," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York.
German Finance Minister Wolfgang Schaeuble acknowledged officially for the first time on Wednesday that Greece may have to restructure its debt, a move that European Central Bank Executive Board member Lorenzo Bini Smaghi said would be a catastrophe.
ECB policymaker Juergen Stark also warned Irish banks cannot rely on ECB emergency funding indefinitely.
"On the back of that we have seen a large rise in the risk premium of these peripheral countries, with bond yields going up relative to Germany," McCormick said.
Greek bond yields soared on Thursday, with short-dated paper coming under the most pressure. The cost of insuring against a Greek sovereign default also rose to a record high.
EURO SELLING
Traders said the fall below $1.4450 in euro/dollar triggered stop-loss orders and accelerated selling after it had earlier failed to test Wednesday's 15-month peak of $1.4521 and an options barrier at $1.4530. In early New York trading, it was down 0.1 percent at $1.4423.
Support was seen around $1.4250-80, the base formed before last week's euro zone rate hike pushed it higher.
The dollar stayed not far from an earlier 16-month low against a currency basket. Recent U.S. economic numbers, including jobless claims and retail sales, have come in on the soft side, which kept intact expectations the Federal Reserve's $600 billion asset-buying program would stay in place until June.
The dollar index was little changed at at 74.947, having earlier fallen to 74.617, bringing its losses this year to around 5 percent. The next target is seen at 74.17, the low hit on Nov 26, 2009.
The dollar fell against the yen, trading down 0.9 percent at 83.14 yen.
The greenback also extended losses against the yen following the jobless claims data.
"The data ... errs on the softer side, and there is nothing here to change a view that the yen will be the beneficiary of any data that pushes Fed hikes further into the future, especially on a day when squeezes on yen crosses is the key," said Alan Ruskin, global head of currency strategy at Deutsche Bank.
One trader cited real money offers above 83.50 yen with further falls likely to target the 100-day moving average at around 82.72 yen.
Goldman Sachs in a monthly report kept its forecasts for dollar/yen unchanged, with the pair seen rising to 90 yen in 12 months. Overall, Goldman remained bearish on the dollar with the U.S. bank targeting euro/dollar to rise to $1.50 in 12 months.
(Additional reporting by Jessica Mortimer in London; Editing by Padraic Cassidy)