FOREX-Dollar falls after Fed's Brainard dampens bets on Sept. rate hike

* Fed's Brainard warns against Fed removing support

* Sept. fed funds contract gains 1 basis point on Brainard comment

* Dollar reverses gains vs riskier currencies

* Yen gains on Brainard comments and BOJ speculation (Updates to afternoon trading, adds comments)

By Sam Forgione

NEW YORK, Sept 12 (Reuters) - The U.S (Other OTC: UBGXF - news) . dollar fell against a basket of major rivals on Monday after comments from a top Federal Reserve official reduced bets that the central bank would raise rates this month by striking a dovish stance, while speculation of a less-accommodative Bank of Japan boosted the yen.

The Fed should avoid removing support for the U.S. economy too quickly because of potential weakness in the labor market and risks of foreign economic downturns, Fed board governor Lael Brainard told the Chicago Council on Global Affairs.

Brainard's speech was closely watched in part because it was the last scheduled by a Fed official before the central bank's meeting on Sept. 20-21. The speech was scrutinized to see if Brainard would maintain her dovish stance on rates or take a more aggressive posture.

The September fed funds contract gained an additional 1.0 basis point following Brainard's comments. That implied a probability of just 15 percent that the Federal Open Market Committee would lift rates next week, compared with a probability of 24 percent at the close of trading on Friday, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch program.

"September is off the table," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. "We continue to expect dollar weakness going forward until the end of the year."

The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.22 percent at 95.126. The index fell sharply immediately following the release of Brainard's remarks at 1:15 p.m. ET (1715 GMT) to a session low of 94.935, reversed the move minutes later, but retraced much of the losses.

The dollar, which had fallen against the yen before Brainard's remarks partly on speculation that the Bank of Japan was studying several options to steepen the bond yield curve, briefly extended its loss on the day to more than 1 percent.

"(Brainard) is just one member of the FOMC, but an influential voice," said Richard Franulovich, a senior currency strategist at Westpac Banking Corporation (Frankfurt: 854242 - news) in New York.

The dollar, which hit a session low of 101.58 yen, was last down 0.83 percent at 101.83 yen. The dollar reversed earlier gains against several riskier emerging market and commodity currencies after Brainard's comments, including the Brazilian real, the Russian rouble and the Aussie dollar.

The euro was last up slightly against the dollar at $1.1235 . (Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; Editing by Meredith Mazzilli)