* Dollar propped up after upbeat US service sector, jobs data
* But unable to make headway as recent rise in US yields stalls
* Euro awaits Sept ECB policy meeting minutes for cues
By Shinichi Saoshiro
TOKYO, Oct 5 (Reuters) - The dollar inched up against a basket of peers on Thursday after data shed more positive light on the U.S. economy, although sagging Treasury yields tempered the greenback’s gains.
The dollar index against a group of six major currencies was 0.05 percent higher at 93.512. It had declined 0.1 percent the previous day as talk the next head of the Federal Reserve could be a less hawkish candidate than expected knocked it off seven-week highs.
The greenback managed to crawl back after Wednesday’s data showed U.S. service sector growth hit is fastest in 12 years in September and private employers added more jobs than forecast despite Hurricane Harvey and Irma.
The gains, however, were kept in check with Treasury yields having pulled back from three-month peaks.
“The dollar has not been able to take full advantage of the latest series of strong U.S. data as Treasury yields have come down from their peaks,” said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
The dollar index had scaled the seven-week peak of 93.920 on Tuesday, when the 10-year Treasury yield hit the three-month high of 2.371 percent after strong U.S. manufacturing data hardened expectations for the Fed to raise interest rates by year-end.
The 10-year Treasury yield last stood at 2.331 percent.
The euro was a shade lower at $1.1755 after gaining about 0.1 percent overnight.
Immediate focus was on the minutes of the European Central Bank’s September policy meeting due later in the global day.
The ECB signalled at the meeting that while it could announce a plan this month for a gradual exit from its very easy monetary policy, it was in no hurry to end it.
The central bank also mentioned the potentially negative aspects of a strong euro at the September policy meeting so the markets will look closely at the minutes to gauge what was discussed about the currency.
The dollar was 0.1 percent higher at 112.850 yen after slipping to as low as 112.320 on Wednesday.
The Australian dollar was flat at $0.7861 and the New Zealand dollar slipped 0.1 percent to $0.7159. (Editing by Shri Navaratnam)