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FOREX-Dollar hits one-month high on rate-hike view, sterling falls

* Dollar index reaches highest since mid-May

* Sterling slides after rates signal from BoE's Carney

* Fed's Dudley says wages, inflation should pick up

(Updates market action; changes dateline, previous PARIS) NEW YORK, June 20 (Reuters) - The dollar reached a one-month high on Tuesday against a basket of currencies on the view the Federal Reserve may raise interest rates once more this year, while sterling tumbled after the Bank of England's head threw cold water on the notion it was close to raising rates. The greenback grinded higher in the aftermath of comments from New York Fed President William Dudley on Monday who said further improvement in the U.S. labor market would kindle inflation, which has shown signs of flagging in recent months. This would leave the door open for the possibility of another rate hike The U.S. central bank as expected raised key overnight borrowing costs by a quarter point to 1.00-1.25 percent last Wednesday. "We had a hawkish Fed last week. We seemed to have had a delayed reaction as the dollar had been oversold," said Mazen Issa, senior currency strategist at TD Securities in New York. Since last week's Fed meeting, a few policy-makers expressed caution about another rate increase in the coming months due to a recent string of disappointing inflation data. Chicago Fed President Charles Evans said on Monday it may be worthwhile for the U.S. central bank to wait until year-end to decide whether to raise interest rates again. "Bill Dudley commonly represents the majority view on the FOMC (Federal Open Market Committee) - this is the main reason why the dollar is appreciating," said Commerzbank strategist Thu Lan Nguyen, in Frankfurt. "Evans was more dovish but he's known to be dovish." The index that tracks the greenback versus the euro, yen and four other currencies was up 0.3 percent at 97.811 after touching 97.871 earlier Tuesday, which was the highest since May 18. The dollar fared best against the British pound among the group of currencies. It gained more than a cent against the pound after BoE Governor Mark Carney said now was not the time to raise U.K. interest rates. Last week three BoE policymakers had voted in favor of a rate hike. But Carney warned of weak wage growth and a likely hit to incomes as Britain prepares to leave the European Union, sending sterling to a two-month low of $1.2603.

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Currency bid prices at 11:56AM (1556 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change

Session

Euro/Dollar EUR= $1.1122 $1.1148 -0.23% +5.79% +1.1165 +1.1121 Dollar/Yen JPY= 111.5100 111.5100 +0.00% -4.59% +111.7800 +111.3200 Euro/Yen EURJPY= 124.02 124.31 -0.23% +0.71% +124.6300 +124.0500 Dollar/Swiss CHF= 0.9760 0.9754 +0.06% -4.11% +0.9764 +0.9726 Sterling/Dollar GBP= 1.2623 1.2732 -0.86% +2.33% +1.2757 +1.2603 Dollar/Canadian CAD= 1.3269 1.3216 +0.40% -1.20% +1.3284 +1.3205 Australian/Doll AUD= 0.7571 0.7594 -0.30% +4.93% +0.7623 +0.7573

ar

Euro/Swiss EURCHF= 1.0857 1.0874 -0.16% +1.31% +1.0881 +1.0852 Euro/Sterling EURGBP= 0.8809 0.8751 +0.66% +3.42% +0.8834 +0.8739 NZ NZD= 0.7235 0.7230 +0.07% +4.24% +0.7267 +0.7221

Dollar/Dollar

Dollar/Norway NOK= 8.5610 8.4999 +0.72% -0.88% +8.5656 +8.4634 Euro/Norway EURNOK= 9.5259 9.4776 +0.51% +4.84% +9.5335 +9.4414 Dollar/Sweden SEK= 8.7897 8.7414 +0.37% -3.49% +8.7988 +8.7257 Euro/Sweden EURSEK= 9.7786 9.7427 +0.37% +2.07% +9.7934 +9.7344

(Additional reporting by Jemima Kelly in Paris; Masayuki Kitano in Singapore; Editing by Hugh Lawson and Chris Reese)