FOREX-Dollar nears record low against euro

NEW YORK, March 12 (Reuters) - The dollar fell broadly on Wednesday and neared a record low against the euro as strong euro zone economic data renewed focus on the divergent paths of European and U.S. interest rates.

The greenback had rallied sharply the previous session after the Federal Reserve said it would lend primary dealers $200 billion in Treasury securities and accept a wider array of mortgage debt as collateral to help ease tight credit markets.

But those gains fizzled out in European trade as the dollar plunged by 1 percent versus the yen. The euro soared to $1.5491 , just shy of a record high, after euro zone data showed industrial output rose by much more than expected in January.

That bolstered the view that the European Central Bank need not rush to cut interest rates. The Fed, though, is still seen cutting its benchmark rate at a March 18 meeting despite its efforts on Tuesday to improve financial market liquidity.

"We're getting a reality check today," said Matthew Strauss, senior FX strategist at RBC Capital Markets in Toronto. "The market is realizing that the strength of recent euro zone data suggests the ECB is right to hold rates and focus on inflation."

Meanwhile, he said the Fed's recent move to get money flowing in financial markets "addresses short-term liquidity issues but doesn't address underlying credit concerns and the U.S. housing decline, which have not gone away."

The euro last traded at $1.5475, up 0.9 percent on the day and just below an all-time high of $1.5495. Strauss said a move to the round number of $1.55 could spark some dollar buying but said that was unlikely to be sustained.