FOREX-Euro recovers from 2-month low vs dollar on Trichet

(Recasts with reaction to US data, updates prices, adds comment, changes dateline, previous LONDON).

NEW YORK, May 8 (Reuters) - The euro rallied on Thursday, recovering from a two-month low against the dollar after the European Central Bank left interest rates unchanged and its president's comments focused more on inflation than some had expected.

ECB President Jean-Claude Trichet said the central bank must ensure inflation remains temporary even as risks to euro zone growth prevail. Trichet was speaking at a news conference after the European Central Bank kept benchmark interest rates steady at 4 percent. For more details, click [nL08903738].

The ECB's decision followed an earlier one from the Bank of England which held rates steady at 5 percent.

Trichet seems to be signalling steady rates, said a Gain Capital trader. "He does not deliver too much of the dovishness some were expecting, sounding very neutral in his statement sos far."

This was euro-positive, the trader said, as investors who had sold the euro short on expectations it had more room to fall would need to buy back those positions to prevent losses.

The euro was last at $1.5427, up 0.2 percent from the New York close <EUR=>. Earlier it had fallen to its lowest since March 11 and down 4.5 percent from April's record high.

The dollar was up 0.1 percent against a basket of six major currencies at 73.623, having earlier hit a two-month high at 73.895 .DXY.

The single currency has been sliding in recent weeks after hitting a record high of $1.6018 on April 22 as poor economic data has started to eat away at perceptions of a resilient euro area economy and increased prospects of rate cuts to come.  Continued...