FOREX-Dollar powers ahead, breaks below 1.50 versus euro

* Euro dives below 1.50, 5-1/2 month low versus dollar

* Dollar has biggest daily gain vs euro in 7-1/2 years

* Euro zone economy shows signs of weakness (Adds details, updates prices, changes byline)

By Lucia Mutikani

NEW YORK, Aug 8 (Reuters) - The dollar rallied on Friday, posting its biggest one-day gain versus the euro in 7-1/2 years as the market repriced interest rate views amid signs the U.S. slowdown was spilling over to the global economy.

The greenback traded below $1.50 for the first time since February, with oil prices tumbling below $115 per barrel, adding to the euphoria.

European Central Bank President Jean-Claude Trichet's highlighting of increasing risks to euro zone growth on Thursday had left traders to conclude that monetary policy would have to become looser, analysts said.

Added to that, the Japanese government cautioned the country's economy might be in recession, and one closely watched measure of British house prices showed the biggest monthly fall on record in July.

Monetary easing in the euro area and the UK would narrow the interest rate differential with the United States, a major factor behind the dollar's unprecedented decline.