FOREX-Dollar gets a bruising as investors push back rate hike bets

* Dollar index on track for 2nd worst week since 2011

* U.S. CPI (Other OTC: CPICQ - news) focus after series of lacklustre economic data

* FX market appears sanguine on "Grexit" risk

* Sterling enjoys best week in 5-1/2 years

By Jemima Kelly

LONDON, April 17 (Reuters) - The dollar skidded to a 10-day low against a basket of major currencies on Friday, after a run of weak U.S. economic data that has cast doubt on prospects for a Federal Reserve interest rate rise in the coming months.

The greenback had rallied by as much as 30 percent since May last year, hitting 12-year highs in March and getting close to them again last week as investors bet that the Fed would start hiking rates as early as June. But as the data has disappointed, those bets have been pushed back.

The latest numbers showed U.S. housing starts rose less than expected in March and factory activity in the mid-Atlantic region grew modestly this month. That suggests the economy may struggle to rebound from a weak first quarter.

Traders will be watching U.S. consumer inflation data due at 1230 GMT for further clues on the state of the economy.

The dollar index, which measures the dollar's performance against a basket of major currencies, fell to 97.001, its weakest since April 7, and leaving it on track for a more than 2 percent drop this week -- its second worst weekly performance since 2011.

"Not only is the June rate hike off the table, but some people are taking a rate hike off for all of this year," said Adam Myers, European head of FX strategy at Credit Agricole (Swiss: ACA.SW - news) in London.

Benefiting from the dollar's weakness, the euro has had its best week in a month against the greenback, rising over 2 percent despite growing concerns that Greece's debt crisis will lead the country to default and to eventually leave the euro zone. It was 0.6 percent higher on Friday at $1.0821.

"Greece is not an issue for the FX market," said Peter Kinsella, senior FX strategist at Commmerzbank in London.

"Every corporate in Europe at this stage has contingency plans in the event of a Grexit. Even (Taiwan OTC: 6436.TWO - news) (if) it were to take place it wouldn't really be a surprise for the market, so further downside in the euro on that basis is not so obvious."

Sterling has also benefited from the dollar's weakness, enjoying its best week in 5-1/2 years despite a looming highly uncertain parliamentary election in three weeks' time.

The pound hit a one-month high on Friday at $1.5053 before retreating a little to $1.5022, still up 0.6 percent and on track for weekly gains of almost 3 percent. (Editing by Alison Williams)