Dollar gives up gains as crude advances

NEW YORK (Reuters) - The dollar surrendered gains on Wednesday as U.S. crude oil futures advanced further, causing stocks to give up some ground.

The euro last traded flat at $1.5586, after falling as low as $1.5521. The dollar cut gains versus the yen to trade steady at 108.07 yen, compared to a session high of 108.33 yen.

"Oil is up and stocks gave up some of its gains, so we're seeing the dollar come off a bit," said Matt Kassel, director of foreign exchange at ING Capital Markets. "The market has been saturated with selling the euros against the dollar the last couple of days, so we're seeing a bit of short-covering ahead of nonfarm payrolls."

U.S. crude oil futures rose more than $2 at midday on Wednesday, buoyed by a rally in gasoline futures that came after U.S. government data showed a surprise drawdown in gasoline stocks last week.

(Reporting by Lucia Mutikani and Gertrude Chavez Dreyfuss; Editing by Leslie Adler)