* Dollar pares earlier gains
* Traders discount ECB officials' comments
* U.S. consumer confidence data strong
(Updates prices, adds analyst comments)
NEW YORK, March 25 (Reuters) - The dollar pared gains against a basket of major currencies on Tuesday but still ended slightly higher on the day, after traders played down strong U.S. consumer confidence data and the potential for the European Central Bank to ease further.
The dollar was up modestly against a basket of currencies, retreating from earlier gains after traders discounted data showing U.S. consumer confidence was stronger than expected in March and climbed to its highest level since January 2008.
"There is an expectation that the U.S. data is going to improve as the weather gets better," said Brian Dangerfield, currency strategist at RBS Securities in Stamford, Connecticut.
Dangerfield said many traders expected U.S. economic data to bounce back after weakness at the start of the year, when many traders blamed soft U.S. economic data on frigid temperatures. As a result, the strong U.S. consumer confidence data had a limited impact in boosting the dollar, he said.
Other mixed economic data had a muted impact on the dollar. U.S. single-family home prices rose slightly more than expected in January, while other data showed sales of new U.S. single-family homes fell in February.
The S&P/Case-Shiller composite index of 20 metropolitan areas rose 0.8 percent in January on a seasonally adjusted basis, beating economists' forecast of a 0.7 percent rise.
Commerce Department data, meanwhile, showed sales of new U.S. single-family homes fell 3.3 percent to a seasonally adjusted annual rate of 440,000 units in February, the lowest level since last September.
The euro trimmed its losses against the dollar after traders discounted statements from ECB president Mario Draghi, ECB governing council member and Bundesbank chief Jens Weidmann, and ECB governing council member Jozef Makuch that signaled further easing was an option.
The ECB "has said the options were open since October, and they haven't really delivered anything since then, and I think that's the key message," said Jens Nordvig, head of G10 FX strategy at Nomura Securities International.
The U.S. dollar index, which measures the dollar against six major currencies, was last up just 0.01 percent. The euro was last down 0.09 percent against the dollar to trade at $1.3827, while the dollar was last up 0.04 percent against the yen to trade at 102.28.
The dollar was last up 0.22 percent against the Swiss franc to trade at 0.8827 francs.
The dollar's slight rise still marked a recovery from Monday, when weak U.S. manufacturing data undercut traders' hopes that a stronger run of U.S. economic data would reinforce the Federal Reserve's plan to tighten monetary stimulus.
Investors had bought the dollar last week after Fed Chair Janet Yellen suggested the possibility of raising interest rates early next year. Traders have said that the dollar's strength will rely on stronger U.S. economic data.
Russia's ruble currency held gains against the dollar after U.S. President Barack Obama and his allies agreed to hold off on more damaging economic sanctions unless Moscow goes beyond the seizure of Crimea.
"Escalation is being avoided," said Nordvig of Nomura.
The dollar was last down 1.55 percent against the ruble to trade at 35.5225 rubles.
Meanwhile, the Chinese yuan consolidated gains against the dollar, a day after posting its biggest rise in nearly 30 months on speculation the Chinese government would unveil stimulus measures to support the economy.
(Additional reporting by Anirban Nag in London; Editing by Peter Galloway)