FOREX-Dollar rally finds new wings on hawkish-sounding Fed minutes

* Dollar index races to fresh 11-month highs

* Minutes showed Fed debated about raising interest rates earlier

* BOE minutes also surprise with two members voting to hike rates

* China flash PMI survey next in focus

By Ian Chua

SYDNEY, Aug 21 (Reuters) - The U.S. dollar traded at 11-month highs against a basket of major currencies early on Thursday, having been given a second wind after minutes of the Federal Reserve's July meeting sounded slightly hawkish.

The dollar index, still basking in the afterglow of Tuesday's upbeat U.S. housing data, climbed as far as 82.277, reaching a high not seen since early September. It has broken clear of the 81.188/81.716 range held for much of this month.

The minutes showed policymakers debated on whether interest rates should be raised earlier given a surprisingly strong jobs market recovery. Most officials, however, wanted further evidence before changing their view on when rates should be lifted.

In any case, it was enough to send U.S. Treasury yields sharply higher with the two-year hitting a two-week high just shy of 0.5 percent.

That in turn underpinned the greenback, which rose to its highest in over four months against the yen at 103.85, not far from the April peak of 104.13. A break there could see the market aim for the 2014 high of 105.45 set in January.

Other currencies also ceded ground against the greenback, notably the euro which pierced through the Nov. 7 trough of $1.3295 to reach an 11-month low at $1.3255.

The New Zealand dollar, already out of favour after the central bank last month paused its tightening cycle, skidded to a 5-1/2 month low of $0.8365.

Some analysts warned dollar bulls might be reading too much into the minutes.

Indeed, while discussions around the table at the Fed meeting is one thing, the final opinion of the Fed Chair and her voting members is quite another.

"The "significant underutilization of labor resources" view of the labour market carries the day as far as monetary policy is concerned," said David de Garis, senior economist at National Australia Bank, referring to Janet Yellen's concerns about jobs.

"The market now waits for Dr Yellen's address to the Kansas City Fed Jackson Hole conference Friday," he added.

While Fed officials may be debating about the merits of an earlier tightening, two policymakers at the Bank of England (BOE) actually voted for a rate hike this month.

The unexpected move revived speculation the BOE might yet raise interest rates this year.

That saw sterling hold up fairly well against the broadly firmer greenback and actually rise on the euro, which plumbed a one-week low at 79.68 pence.

In Asia, all eyes will be on a preliminary survey of China's manufacturing sector due at 0145 GMT. Last month, the sector posted its strongest growth in at least 1-1/2 years as new orders surged to multi-month highs. (Editing by Eric Meijer)