(Updates prices, adds analyst comments, dateline; previous LONDON) * Euro fails to latch on to gains made on French PMI data * Yellen comments continue to support dollar * Yuan recovery helps Aussie By Sam Forgione NEW YORK, March 24 (Reuters) - The dollar rose against the euro on Monday after signs of slower growth in Germany worried traders and expectations of tightening U.S. monetary policy continued to support the greenback.
Data showed the German private sector slowed in March, disappointing investors who were positioned for a better reading on the euro zone's largest economy.
The euro's losses reversed from an earlier European session high after surveys showed French business activity grew in March at its fastest in more than 2 1/2-years, beating forecasts for further contraction.
The weak German data triggered the potential for more monetary easing from the European Central Bank, which would likely weaken the euro further, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York. "Germany is going to determine ECB policy," he said.
Partly supporting the euro has been the perception that the European Central Bank is reluctant to ease monetary policy any further. The euro's resilience prompted the president of the European Council, Herman Van Rompuy, to complain on Friday that the currency was too strong for euro zone exporters.
Investors snapped up the dollar last week as they bet on a U.S. interest rate hike early in 2015, after Fed Chair Janet Yellen surprised markets by raising the prospect of such a move.
Traders said that Yellen's comments underpinned the dollar's strength versus the euro on Monday. Traders also said further gains for the dollar depended on the strength of coming data. Any acceleration in the U.S. economic recovery is likely to bolster expectations of an earlier normalization of Fed policy.
The euro last traded down 0.13 percent against the dollar at $1.3775. The dollar index, a gauge of the dollar's performance against a basket of major currencies, was last up 0.1 percent.
The dollar last traded down 0.02 percent against the Japanese yen at $102.23. Declines in U.S. stocks on Monday pushed up demand for the yen as a safe-haven currency, said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.
All three major U.S. stocks indexes fell, with the Standard & Poor's 500 last down 0.73 percent.
Financial data firm Markit said its "flash" or preliminary U.S. Manufacturing Purchasing Managers Index slipped to 55.5 in March from 57.1 in February. Readings above 50 indicate expansion. The data had little effect on the dollar.
A recovery in the Chinese yuan helped the Australian dollar move up from lows. The Aussie, which is used as a more liquid proxy by investors and speculators to back their views on China, had dipped after a survey showed activity in Chinese factories contracted again in March.
China's flash Markit/HSBC Purchasing Managers' Index fell to an eight-month low of 48.1 in March from February's final reading of 48.5.
The Aussie dropped to $0.9048 on the March number, but it kept clear of last week's low of $0.8990 and later drifted back to $0.9124, 0.42 percent higher on the day.
(additional reporting by Anirban Nag in London; Editing by Nick Zieminski)
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