* Euro edges lower in choppy trade
* Euro falls to one-week low after U.S. consumption data
* U.S. ISM also weighs on risk tolerance
* Bernanke gives no QE hint (Updates prices, adds quotes, links and graphics, changes byline)
By Julie Haviv
NEW YORK, March 1 (Reuters) - The euro fell to a one-week low against the dollar in choppy trading on Thursday as U.S. economic data showed the recovery lost steam earlier this year but remained in better shape than the euro zone.
U.S. manufacturing cooled in February and consumer spending was flat in January for a third straight month. Other data, though, showed new claims for jobless benefits fell to a near four-year low last week while reports from retailers and automakers on February sales were also upbeat.
Prospects for a sustained economic recovery around the globe, however, darkened as sputtering factory activity in Europe overshadowed more positive data from Asia.
The euro had already been weak before New York opened after a huge injection of cash by the European Central Bank on Wednesday and lingering concerns about debt and the fragile euro zone economy.
The euro was last down 0.1 percent to $1.3312 after touching a one-week low of $1.3280, breaking near-term support at its 100-day simple moving average of $1.3293.
The euro hit a three-month high of $1.3485 on Wednesday, according to Reuters data. The euro also posted its best monthly performance in February since October.
"The euro is now in a consolidation phase after a position squeeze that started last week," said Greg Anderson, G10 strategist at CitiFX, a division of Citigroup, in New York.
"This consolidation should leave the euro at around $1.3250 by Friday's close," he predicted.
Testimony from Federal Reserve Chairman Ben Bernanke to a Senate panel was closely watched but had minimal impact.
Repeating Wednesday's prepared remarks, the Fed chairman cautioned that the recent steep drop in the U.S. unemployment rate was unlikely to continue given a still-soft economy, but he stopped short of signaling a further easing of monetary policy.
Another round of asset purchases, or quantitative easing, would be negative for the dollar as it is tantamount to printing money. That contrasts with the ECB's recent cash infusion via its Longer Term Refinancing Operation.
"Stocks are higher, but not the euro," said CitiFX's Anderson. "One can argue that the market may be interpreting the LTRO as a form of QE and we are getting a whiff of that in today's trading."
"The market is starting to realize that QE3 is off the table, though Bernanke still has a cautious tone," said David Song, currency analyst at DailyFX. "Bernanke is a little more dovish than yesterday, highlighting concerns about fiscal responsibility and that the debt situation is unsustainable."
Attention on Thursday also turned to a European Union summit and a meeting of euro-zone finance ministers amid discussion of Greece's progress on meeting the terms of its latest bailout.
Traders reported early euro selling by Asian central banks and macro funds, with many cutting euro positions as the ECB's injection of 530 billion euros in three-year funds had been broadly priced in.
Morgan Stanley analysts were more upbeat on the euro's immediate prospects, raising their end-March euro/dollar forecast to $1.34 from $1.27 as the ECB funds eased banking and sovereign debt strains. They still expect the euro to decline sharply by the end of the year, however, though they now see it at $1.19 rather than $1.15.
The dollar was flat at 81.16 yen, remaining close to a nine-month high touched on Monday as the yen remains under pressure after Bank of Japan easing measures.
UBS strategists said that they expected the Fed to normalize rates much earlier than the Bank of Japan, a policy divergence that should lead to a widening of the gap between two-year Treasuries and Japanese government bond yields.
The yield gap has a tight correlation with the dollar/yen pair and a widening should see the dollar drift higher. As such, UBS expects the dollar to rise to 85 yen by 2012 and 90 yen by 2013 and repatriation flows ahead of the Japanese financial year end in March are unlikely to be yen supportive. (Additional reporting by Nick Olivari; Editing by Padraic Cassidy)