FOREX-Dollar off lows after upbeat data, still down on the week

* Dollar index steadier, off one-month lows

* Upbeat U.S. data helps counter dovish Fed

* Sterling outperforms after more signs of economic strength

By Ian Chua

SYDNEY, June 20 (Reuters) - The dollar stayed under pressure early on Friday, but managed to reverse some of its losses in a quieter session overnight after upbeat U.S. data helped temper the fallout from the Federal Reserve's surprisingly dovish policy outlook.

Data offering more evidence the U.S. economy was recovering from a disastrous first quarter helped lift the dollar index to 80.317 from a one-month trough of 80.147. Still, it was down 0.3 percent on the week, its biggest decline in two months.

Investors had sold the greenback after the Fed on Wednesday sounded comfortable about the outlook for inflation despite recent signs of a pick-up in price pressure.

That dashed some expectations the Fed might have to start lifting interest rates earlier than expected and initially helped push U.S. Treasury yields down.

But data on Thursday showed new claims for jobless benefits fell last week and factory activity in the mid-Atlantic (Frankfurt: 98S.F - news) region accelerated in June, prompting Treasury yields to reverse higher.

"The rates market appeared to have second thoughts about Wednesday's post-FOMC reaction, with yields reversing some of their decline and helping the USD stabilize as well," analysts at BNP Paribas (Milan: BNP.MI - news) wrote in a note to clients.

"We think the bias remains to the upside for U.S. yields from current levels, with the passage of time likely to force greater pricing of rate hike risk absent renewed deterioration in the data."

Against the yen, the dollar climbed back towards 102.00 yen from Thursday's low of 101.74, while the euro eased back to $1.3610 from a two-week high of $1.3644.

The Norwegian crown stole the limelight by plunging over 2 percent on Thursday after the country's central bank hinted at the possibility of a cut in interest rates, stunning markets that had wagered the next move would be up.

The dollar surged to 6.1178 crowns in its biggest one-day gain in more than a year, while yields on short-term Norwegian debt tumbled 20 basis points.

The best performer overnight was sterling, which hit a 5-1/2 year high of $1.7064 thanks in part to local data that showed factory orders grew at their fastest pace in six months in June.

The robust report highlighted the risk that the Bank of England could raise interest rates well before the Fed.

The Australian dollar dipped back to 94 U.S. cents, while its New Zealand counterpart remained stuck near 87 cents after retreating from a six-week high of $0.8736.

Asia has little to offer in terms of key economic data on Friday, leaving the focus on stock markets, which looked set to open higher after another record high for the U.S. S&P 500 . (Editing by Shri Navaratnam)