* U.S. dollar index at 15-month low
* UK CPI jumps to 4.4 pct, pushes sterling higher
* Yen trading subdued, no intervention seen (Updates prices, adds comment, changes byline, dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, March 22 (Reuters) - The U.S. dollar hit a 15-month low against other major currencies on Tuesday and could extend losses as a resumption in risk appetite spurred demand for currencies that offer higher returns.
Expectations of a euro zone interest rate hike next month lifted the euro to a 4-1/2-month high against the dollar earlier, but gains were capped by a reported options barrier at $1.4250 and a sell-off in euro/sterling following a jump in UK inflation data.
The yen traded in a tight range, hovering around 81 per dollar. In the near term, analysts said the 80 to 80.85 area could serve as a floor as markets remained on alert for further intervention by the Group of Seven nations to counter yen strength.
Global financial markets stabilized after G7 launched coordinated yen-weakening intervention last week and euro zone officials agreed Monday on the setup of the European Stability Mechanism, or a permanent euro zone bailout fund.
"Generally global policymakers and authorities are really opening the door to taking on more risk," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto.
The dollar index, a measure of the greenback's value against a basket of six major currencies, fell 0.2 percent to 75.249 <.DXY>, the lowest since early December 2009.
Sterling added 0.4 percent at $1.6381
British inflation last month surged to a 28-month high of 4.4 percent, reviving speculation the Bank of England will not wait much longer to raise interest rates. For details, see [ID:nLDE72L0TT]
Money markets are now fully pricing in a quarter-point rate hike from the Bank of England in July, versus August before the data.
"In general, the risk is for tighter monetary policy from the BoE than is currently priced in by the market, and looser monetary policy from the ECB (European Central Bank) than is currently priced in by the market," said Paul Robinson, chief sterling strategist at Barclays Capital.
YEN SUBDUED
The euro remained well supported by comments from ECB President Jean-Claude Trichet and other ECB policymakers, who reiterated they were ready to act quickly to guard against inflation. Most economists expect a rate hike next month.
German two-year bond yields have risen about 30 basis points over the past week to 1.75 percent, widening the gap over U.S. Treasury yields to about 110 basis points.
The euro rose as high as $1.4249
"Euro/dollar is supported after Trichet continued to signal a rate hike in April and by developments in yields," said Mic Ingenuus, currency strategist at Nordea in Copenhagen.
"A test of the $1.4283 level is extremely likely in the next couple of days, if not today."
The euro also drew support from a relatively strong Spanish T-bill auction, where demand rose and the yield fell compared with the last sale.
Japan again warned it would act to keep the yen in check, but traders saw no action in the FX market on Tuesday from Japanese or other G7 authorities following last Friday's joint intervention. That resolve could be tested if dollar/yen looks like it will break back below 80 yen. [ID:nL3E7EM02L]
The dollar last traded at 80.95 yen
Yen volatility has eased significantly since late last week, and some analysts said calmer markets in the coming weeks would decrease the need for Tokyo to smooth any appreciation in the Japanese currency, even if the dollar creeps below 80 yen. (Additional reporting by Jamie McGeever in London; editing by Jeffrey Benkoe)