By Lucia Mutikani

NEW YORK (Reuters) - The dollar fell broadly on Friday as fears of further write-downs at U.S. financial institutions raised speculation the Federal Reserve would not signal a shift toward tighter policy when it meets next week.

Rebounding oil prices, more inflation-busting talk from a European Central Bank official and an unexpected surge in German producer prices in May to an almost two-year high added to selling pressure on the greenback.

These developments were seen as confirmation that the European Central Bank would deliver an interest rate hike next month, flagged at the bank's last policy meeting. A hike would further enhance the euro's yield appeal versus the dollar.

"We are starting to see a slip in confidence in the overall outlook of the U.S. economy yet again," said Greg Salvaggio, vice president of trading at Tempus Consulting in Washington.

"Expectations are growing on the street that Bernanke is going to step away from the overtly hawkish tone that he put out to the market two weeks ago. Speculation is he is going to signal that rate hikes will not be forthcoming in as quick a manner as people want to believe they will."

Fed Chairman Ben Bernanke's tough inflation talk boosted the dollar in recent weeks, but analysts reckon that signs of more turmoil on the U.S. financial sector could prevent the central bank from following the hawkish words with action.

The Fed meets on June 24-25 and is widely expected to leave the fed funds rate target at 2 percent after slashing it by 3.25 percentage points since September. The statement accompanying the decisions will be closely watched for clues on the future course of monetary policy.

U.S. interest rate futures have reduced the chances of a 25 basis points rate increase in August to about 40 percent from 48 percent. Expectations of a year-end rate hike have also been trimmed.