* Dollar weakness may be short lived if payrolls surprise
* Higher U.S. yields offers support to greenback
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
LONDON, July 5 (Reuters) - The dollar's bounce stalled on Thursday after the U.S. Federal Reserve's policy minutes failed to provide a clear picture of future interest rate increases, although investors were reluctant to add bearish bets before some key U.S. data.
Federal Reserve policymakers were increasingly split on the outlook for inflation and how it might affect the future pace of interest rate rises, according to the minutes of the Fed's last policy meeting on June 13-14 released on Wednesday.
"The latest Fed minutes indicate that (Chair) Janet Yellen is preparing the ground work for unwinding its balance sheet at the end of the year and markets aren't expecting large interest rate increases for now," said David Madden, markets analyst at CMC Markets in London.
The dollar was broadly flat at 113.32 Japanese yen in early trading after rising more than 1 percent this week. It was at $1.13495 per euro.
Analysts were wary of adding bearish positions against the dollar before U.S. data on tap later in the day which includes ADP employment, ISM non-manufacturing PMI and the initial jobless claims report.
Also the dollar's continued strength against emerging market currencies such as the South African rand and Turkey's lira would deter short sellers.
Stronger-than-expected non-farm payrolls data on Friday would mean the dollar may find some support around current levels.
Investors will also look to comments from San Francisco Fed President John Williams and Fed Board Governor Jerome Powell for their potential impact on U.S. yields.
In terms of trading ranges, the dollar index is comfortably within recent established ones with the basket of currencies holding below a 20-day moving average it broke below last week.
Markets were also waiting for the European Central Bank's June policy meeting minutes due later on Thursday. ECB executive board member Peter Praet is also scheduled to take part in a conference in Paris.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.bi z / c m s / ? p a g e I d = l i v e m a r k e t s
(Additional reporting by Shinichi Saoshiro and the TOKYO markets team)