FOREX-Dollar pares gains after weaker services report

NEW YORK, July 3 (Reuters) - The dollar pared gains versus the euro and the yen on Thursday after a report showed a lower than expected reading on the U.S. service sector in June.

In morning trading in New York, the euro was last 0.7 percent lower at $1.5772 <EUR=>, compared with $1.5743 prior to the release. The dollar was 0.4 percent firmer against the Japanese currency at 106.35 yen <JPY=>, from 106.50 before the data.

The Institute for Supply Management's non-manufacturing index came in at 48.2 for June, compared with 51.7 in May. A reading below 50 signals contraction. Economists had expected a reading of 51.0, according to a Reuters poll. (Reporting by Vivianne Rodrigues; Editing by Jonathan Oatis)