* Dollar hits 3-week high vs euro

* Obama stimulus package providing dollar support

* Easing risk aversion, rising stocks boost dollar vs yen

* Slowing inflation seen denting euro ahead of ECB meeting (Adds comment, recasts, updates prices, changes byline, dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Jan 5 (Reuters) - The dollar rose on Monday, boosted by increased expectations of interest rate cuts by major central banks and news of a planned U.S. stimulus package aimed at addressing the global financial crisis.

U.S. President-elect Barack Obama, seeking as much as $310 billion in tax cuts, is proposing that about 40 percent of the package worth up to $775 billion be in the form of tax breaks. For more see [ID:nN04350872].

"There are a couple of things helping the dollar and one of them is the Obama stimulus package," said David Watt, senior currency strategist at RBC Capital Markets in Toronto. "The package is nothing new, but at least we are getting details about the plan. That is providing short-term support for the dollar because it caps the economic risk for the U.S."

The euro, meanwhile, hit three-week lows versus the dollar, with weaker-than-expected Italian and Spanish inflation data and tax cuts in Germany seen raising pressure on the European Central Bank to cut interest rates further soon.