FOREX-Dollar set for biggest weekly rise since the 2008 financial crisis

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee

LONDON, March 20 (Reuters) - The dollar eased on Friday as stock markets around the world recovered but remained on track for its biggest weekly rise since the global financial crisis in 2008 as a global scramble for funding sent other currencies reeling.

Currencies from the Australian dollar to the British pound tumbled to multi-year lows this week, after coordinated rate cuts by central banks and billions of dollars of fund injections failed to calm panicky markets.

But Friday restored some calm after days of selling. The Australian dollar jumped 3.4%, although analysts warned that it was too early to call an end to the rout.

The U.S. dollar is up about 3.5% against a basket of currencies through a week when investors have liquidated everything from stocks to bonds to gold and commodities. It hit a three-year peak of 102.99 in early Asian trading.

Gauges of expected market swings in the euro for one-month maturities edged lower while currency swap spreads, where most of the funding pressure in dollar markets was evident in recent days, eased.

"The dollars are the grease in the cogs of the financial system and when they were in short supply, things just weren't 'working'," said Brad Bechtel, global head of FX at Jefferies LLC. "Now things are getting a little better."

The euro was among the major gainers, briefly up more than 1% to $1.0832 before retracing some gains to stand 0.4% up on the day.

Sterling rose 3.3% from a 35-year low to $1.1878.

"People are selling everything and the common thread is they just want cash," said Stuart Oakley, a Singapore-based executive with Nomura, who runs the bank's trading with its clients.

"People just want cash because at the end of the day, people don't know where their next revenue is coming from and they've got payments to meet. I don't think that's going to change."

Cross-currency basis swaps, which show the cost of borrowing dollars abroad, showed that strains remained.

The premium over interbank rates that investors were paying to swap yen for one-year dollar funding was around 68 basis points, close to the 2016 highs touched last week.

Euro cross-currency basis swap spreads also remain wide , but tightened to 9 bps from levels of above 100 bps seen earlier this week.

Also showing a tightening trend is the FRA-OIS spread <USDF-O0X1=R>, a barometer of risk in the interbank market. (Reporting by Saikat Chatterjee Editing by Mark Heinrich)