Markets | Fri May 15, 2015 12:50am EDT

SYDNEY/TOKYO

The dollar struggled near three-month lows against the euro on Friday, with mixed U.S. data doing little to ease investor concerns that the pace of recovery in the world's largest economy may be too slow to allow interest rate hikes soon.

The number of Americans filing new claims for unemployment benefits fell last week to near a 15-year low, even as the economy struggles to regain momentum after abruptly slowing in the first quarter.

But separate data showed U.S. producer prices were much weaker than anticipated, adding to a series of soft economic data in recent weeks and cementing expectations that the Fed can afford to wait until late this year before raising rates.

After Wednesday's disappointing retail sales, "it is some comfort that labor at least seems to be progressing well in Q2," said Elsa Lignos, senior currency strategist at RBC.

"But it will take more than one slightly better jobless claims number to turn USD around."

Indeed, the dollar stayed on the defensive against the euro and sterling, which climbed to three- and 5-1/2 month highs of $1.1445 and $1.5815 respectively.

Both currencies were just off those peaks in mid-morning Asian trade.

That left the dollar index wallowing at four-month lows. The index is down 1.5 percent so far this week and has dropped 7 percent from a 12-year peak of 100.39 on March 13.

Yet, the dollar fared better against the yen and the Antipodean currencies. It last stood at 119.38 yen , having bounced off a two-week trough of 118.885.

The Australian dollar slipped to $0.8063 from a near four-month peak of $0.8164, while its New Zealand peer recoiled to $0.7473 , from a one-week high of $0.7564.

"Worries about the U.S. economic outlook have been a major factor behind the dollar's recent pullback," said Tohru Sasaki, head of Japan rates and FX research at JPMorgan Chase Bank in Tokyo.

"Upcoming U.S. economic data is next big thing to watch out for," he said. "It could push the dollar even lower."

U.S. data due later on Friday include industrial production for April and the University of Michigan's preliminary May reading on consumer sentiment.

Some other analysts said there is still some hope that coming data will show the U.S. economy regaining momentum after a very slow patch in the first quarter.

That might see markets quickly price back in a stronger chance of a rate hike by the Federal Reserve this year.

There was little market reaction to comments by European Central Bank President Mario Draghi on Thursday, who sought to assure markets the ECB is fully committed to rolling out its trillion-euro-plus bond buying program.

Draghi did not comment on tense debt talks under way between Greece and international creditors, which remain a key threat to the euro zone economy.