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* U.S. Treasury says mulls ultra long-term bonds
* U.S. April services sector growth beats expectations
* Dollar hits 112.49 yen, highest since Mar. 21
* Fed to release policy statement at 2 p.m. EDT (1800 GMT)
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Sam Forgione
NEW YORK, May 3 (Reuters) - The U.S. dollar hit its highest in more than six weeks against the yen on Wednesday as traders digested the possibility of ultra-long U.S. bond issuance, and after strong U.S. services sector growth kept hopes alive for a Federal Reserve interest rate increase in June.
The U.S. Treasury said it was studying the possibility of issuing ultra long-term bonds. The potential for greater issuance as a result of an ultra long-term bond being rolled out and higher Treasury yields as a result helped the dollar gain against the yen, analysts said.
The Institute for Supply Management (ISM) said its index of non-manufacturing activity rose to 57.5 in April from 55.2 the month before. The reading was above expectations of 55.8 from a Reuters poll of economists and dealt some relief to investors after a recent run of weak U.S. economic data
"The market is getting excited about the possibility of a 50-year bond," said Kathy Lien, managing director at BK Asset Management in New York.
The dollar hit 112.49 yen, its highest since March 21. The euro dipped 0.2 percent against the dollar to a session low of $1.0905 after touching a 5-1/2-month high of $1.0950 last week.
The ISM data boosted optimism that the Fed will hike rates in June despite weak first-quarter U.S. gross domestic product growth and inflation data. The Fed, which is scheduled to release a policy decision at 2 p.m. EDT (1800 GMT), is expected to hold interest rates steady.
"The stronger services growth was consistent with the U.S. economy turning the corner in Q2, so that's helping to strengthen the argument for the Fed to raise rates around the middle of the year," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Manimbo also said solid U.S. private payrolls data helped reinforce expectations for a strong April U.S. non-farm payrolls report this Friday. ADP said Wednesday that private employers expanded their payrolls by 177,000 jobs last month.
While that was the smallest gain since last October, it roughly matched expectations of economists surveyed by Reuters, who had forecast the report would show a gain of 175,000 jobs.
Manimbo added that the euro was weaker partly on uncertainty ahead of a televised debate between France's presidential rivals on Wednesday.
The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.2 percent at 99.144 . (Additional reporting by Jemima Kelly in London; Editing by David Gregorio)