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FOREX-Dollar hits 2-1/2-year low against euro on ECB bets, month-end moves

(Updates prices, adds comments; changes byline, dateline, pvs LONDON)

* Portfolio adjustments at month's end boost euro

* Euro zone inflation data meets expectations

* Dollar touches more than six-week low vs yen

* Low U.S. inflation concerns weigh on dollar

NEW YORK, July 31 (Reuters) - The U.S. dollar hit a 2-1/2-year low against the euro on Monday on month-end portfolio adjustments and expectations for a more hawkish European Central Bank, and touched a more than six-week low against the yen on concerns over low U.S. inflation.

The euro rose as much as 0.4 percent against the dollar to $1.1797, its highest against the greenback since January 2015. Analysts said euro zone inflation data for July kept expectations alive that the ECB would continue on its path toward tightening monetary policy, while month-end portfolio rebalancing pushed the euro higher.

A flash estimate of euro zone inflation showed that consumer price rises in July were level with the month before, standing stable at 1.3 percent and in line with forecasts of economists polled by Reuters. The ECB targets inflation of just below 2 percent.

"Room for the ECB to continue to deny that the economy is getting better seems to be diminishing," said Thierry Wizman, global interest rates and currencies strategist at Macquarie Group Ltd in New York.

The dollar also touched 110.32 yen, its lowest against the Japanese currency since June 15. The dollar has struggled as weak U.S. inflation readings have dampened expectations for hawkish Federal Reserve policy, with data on Friday showing U.S. labor costs rose less than expected in the second quarter.

"There is a total absence of any meaningful wage and inflation pressure" in the United States, said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York. Franulovich also cited the month-end portfolio adjustments as a reason for the euro's gains.

The dollar was last on track to fall 1.7 percent against the yen in July to mark its biggest one-month percentage decline in six months. The euro was on track to gain 3.2 percent against the dollar to post its biggest monthly gain since March 2016.

The dollar gained against commodity currencies such as the Canadian, Australian and New Zealand dollars as a drop in oil prices weighed on the currencies. The dollar was last up 0.5 percent against the Canadian dollar at $1.2498, while U.S. oil prices were last down about 0.6 percent.

That limited losses for the dollar index, which measures the greenback against a basket of six major currencies including the Canadian dollar. The index was last down just 0.2 percent at 93.120. (Reporting by Sam Forgione; additional reporting by Saikat Chatterjee; editing by Grant McCool)