* U.S. inflation data major event risk of week
* Intense dollar weakness may be over - JP Morgan
LONDON, Aug 7 (Reuters) - The dollar edged lower on Monday, giving back some of its gains from Friday as investors consolidated bets before inflation data this week that may signal a turnaround in the currency's weakness this year.
Friday's strong employment data helped the dollar snap out of its funk which has seen it fall more than 8.5 percent so far this year.
"Friday's strong U.S. jobs data has given the dollar bears something to think about but we would have to see whether this trend can be sustained before we see large short dollar position unwinding," said Kathleen Brooks, research director at City Index in London.
The dollar index against a basket of six major currencies was 0.1 percent lower at 93.40 having climbed 0.75 percent on Friday. That was its biggest single-day rise of 2017 and pulled it away from 92.548, its lowest level since May 2016 that it marked on Wednesday.
While the dollar surged in the wake of the jobs data on Friday, both Asian and European trading was marked with a bit more scepticism on the greenback's outlook with investors preferring to buy other majors like the euro on dips.
The single currency rose 0.3 percent against the dollar to $1.1805 on Monday after falling more than 0.7 percent on Friday.
Of greater concern to dollar bulls was that the bounce in the greenback was not matched with a corresponding rise in U.S. benchmark bond yields. Ten year U.S. Treasury yields are a shade lower at 2.27 percent on Monday.
That might change if inflation data this week surprises on the upside prompting analysts to revise up their expectations of policy tightening from the U.S. central bank.
U.S. producer prices for July due on Thursday and consumer price index figures on Friday should confirm whether the labour market strength is spilling over into inflation.
Fed funds futures on Thursday implied traders saw a roughly 47 percent chance of a Fed rate hike in December, according to CME Group's FedWatch tool, slightly higher from a week ago.
But JP Morgan strategists say the intensification of broad dollar weakness that had unfolded since late June, has subsided in the past week based on multiple indicators, suggesting the dollar's weakness may be overstretched.
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 (Editing by Pritha Sarkar)