FOREX-Dollar advances after data implies stable economy

(Updates to morning US trading)

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US jobless claims fall

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Euro declines on ECB leadership speculation

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Fed divided on rate cuts, market cautious

By Chuck Mikolajczak

NEW YORK, Feb 19 (Reuters) - The dollar rose for a fourth straight session on Thursday after data indicated the economy was stable, giving ?the Federal Reserve leeway to hold interest rates in ?check. The Labor Department said weekly initial jobless claims fell by 23,000 to an adjusted 206,000, below the 225,000 estimate of economists ?polled by Reuters.

"It doesn't look like an economy suffering from higher rates. Even with the ?pressure from the White House to lower rates, that pressure doesn't really ?hit until May, ?so there's no real trend to this information right now," said Joseph Trevisani, senior analyst at FXStreet in New York.

"That's why ?we're headed back to a range. Without a ?reason to move, traders are going to be conservative."

TRADE DEFICIT WIDENED Other data from the Commerce Department showed the U.S. trade deficit widened to $70.3 billion, well ?above the $55.5 billion estimate.

The dollar index, which measures ?the dollar ?against a basket of currencies, rose 0.2% to 97.90, with the euro down 0.16% at $1.1763. The euro fell for a second straight day, extending declines after its biggest daily percentage ?decline since January 30 on Wednesday after the Financial Times reported that European Central Bank ?President Christine Lagarde was expected to leave her post before the end of her eight-year term. Four sources told Reuters that Lagarde has informed colleagues she remains focused on her job and she would tell them first if she was about to step down, a message they took ?to mean ?she was not about to resign.

Minneapolis Fed President Neel Kashkari said ?the labor market has remained "pretty resilient" and that the central bank is close on both mandates of ?maximum employment and stable prices. Markets are not pricing in more than a 50% chance for a rate cut of at least 25 basis points from the Fed until its June meeting, according to CME's FedWatch Tool.

Fed minutes released on Wednesday showed policymakers were divided over where to take U.S. rates and suggested that the next chairman, due to start in May, would struggle to push through rate cuts. Investors were mindful ?of a reported buildup of U.S. forces in the Middle East and a potential U.S.-Iran conflict, a concern that lifted oil prices.

Against the Japanese yen, the dollar strengthened 0.12% to 155.01 while ?sterling weakened 0.29% to $1.3452.

(Additional reporting by Tom ?Westbrook in Singapore, Dhara Ranasinghe and Amanda Cooper in London; Editing ?by Anil D'Silva and Barbara Lewis)