FOREX-Contrasting data boosts dollar and weighs on euro

* Dollar index hits 7-month peak; euro near 3-mth lows

* Weak euro zone jobs data contrasts with strong U.S. data

* Swiss franc, Norway crown fall after policy decisions

* BOJ stimulus expectations keeps yen weak

LONDON, March 14 (Reuters) - The dollar rose to a seven-month high against a basket of currencies and a three-month peak versus the euro on Thursday as positive U.S. data contrasted with economic and political concerns in the euro zone. The dollar also rose to a six-month peaks against the Swiss franc and the Norwegian crown after central bank policy decisions and accompanying comments in Switzerland and Norway pushed those currencies lower. Strong U.S. retail sales data on Wednesday, which followed solid U.S. jobs figures last week, increased optimism the U.S. economy was on a recovery path and could withstand fiscal tightening. This boosted the dollar, with its index rising to 83.126, its strongest since early August 2012. fell 0.3 percent in the last three months of 2012 and intensifyied concerns about the economic outlook.

This followed figures on Wednesday revealing a bigger-than-expected drop in euro zone factory output in January and helped push the euro down 0.3 percent on the day to a low of $1.2913, its weakest since mid-December. Political uncertainty in Italy and a likely bailout for Cyprus were also expected to keep the euro weak. But traders said reported options expiries at $1.2925 on Thursday could keep the euro pinned around this level and limit its falls. "Weak euro zone industrial production and employment data contrasts with stronger U.S. employment and retail sales figures which is driving interest rate expectations in favour of the dollar over the euro," said Adam Myers, senior currency strategist at Credit Agricole. Credit Agricole forecasts the euro to fall to $1.27 by the end of June, though Myers said there was a risk it could fall further. Demand from central banks to diversify their dollar holdings into euros could temper euro falls, however. An improving U.S. economic picture has revived talk that the Federal Reserve might pare back monetary easing measures towards the end of this year. "It is all about broad dollar strength. We have seen a breakdown in the correlation that good U.S. data is bad for the dollar," said Peter Kinsella, currency strategist at Commerzbank. He noted that rising 10-year U.S. treasury yields could signal further dollar gains.

SNB, NORGES BANK DECISIONS The Swiss franc fell to 0.95555 per dollar, its lowest since early September, after the Swiss National Bank it stood ready to take more monetary easing measures if needed, adding that the currency was still too high and that it would enforce the 1.20 franc per euro limit with "utmost determination".

Norway's crown also lost ground as the Norges Bank said its key policy rate would be kept low for longer than market participants had expected, pushing the dollar as high as 5.8214 crowns, also its strongest since September. The dollar also firmed against the yen, which fell broadly after a short-lived reprieve earlier this week when some investors and speculators chose to take profits on the Japanese currency's persistent slide. The dollar was up 0.4 percent at 96.46 yen. Expectations of aggressive policy easing from the Bank of Japan are expected to underpin the dollar, with many traders looking for a retest of the 3 1/2-year high of 96.71 yen hit on Tuesday. Commerzbank's Kinsella said 101-102 yen to the dollar was easily within sight. The euro was up 0.1 percent at 124.63 yen but was still some way from the 34-month peak of 127.71 set last month.