(Updates market prices, adds quotes, changes byline, dateline, previous LONDON)
* Dollar gains 0.5 pct vs euro
* Euro off overnight lows as Paris worries subside
* Analysts see Fed/ECB policy divergence pushing dollar gains
* Dollar rises vs yen after Japan GDP slips
By Dion Rabouin
NEW YORK, Nov 16 (Reuters) - The dollar rose on Monday against major currencies as markets grow more convinced the Federal Reserve will raise interest rates next month and investor worries faded over Friday night’s attacks in Paris.
The euro euro was off 0.6 percent versus the greenback at $1.0710, having pared losses from a near 6-1/2-month low overnight.
“I’d say market’s taking relatively in stride what happened in Paris. The euro has been hit for sure, but it’s well off the lows,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York.
Even before the attacks in Paris, the euro had been under pressure from expectations the European Central Bank will step up monetary easing next month, possibly cutting interest rates deeper into negative levels and buying more assets under its quantitative easing program.
“There is some caution ruling markets as we have seen with the reaction to stock markets. Ultimately, the Fed/ECB divergence will be the focus, with markets already pricing in a 10 basis point deposit rate cut by the ECB and extension of the QE program,” said Manuel Oliveri, FX strategist at Credit Agricole.
The dollar index, which measures the greenback against a basket of major currencies, was up slightly at 99.212, just off a seven-month high. The index has settled in the range of 98.4-99.5 since the Nov. 6 release of a surprisingly robust U.S. jobs report.
A recent Reuters poll of more than 80 leading economists found a 70 percent chance the U.S. central bank would raise its short-term lending rate at its final meeting of the year on Dec. 15-16. In October, 55 percent had seen a December rate rise.
The dollar also rose against the Japanese yen, adding 0.3 percent on Monday to 123.03 yen per dollar, drawing strenfgth from data showing Japan’s economy slipped more than expected in the July-September period, the second consecutive quarter of economic contraction.
So far in November, the dollar has gained around 2 percent against the yen.
Editing by W Simon