* Euro recoups some losses but remains fragile
* G7 inadequate on Greece, more needed-analysts
* Other high-yielding currencies strengthen (Updates prices, adds quotes)
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 8 (Reuters) - The U.S. dollar drifted lower on Monday as a modest recovery in overseas stock markets and commodities enhanced risk appetite and prompted investors to venture into higher-yielding currencies.
The euro, however, was flat against the dollar, with investors still worried about the fiscal health of euro zone members Greece, Portugal and Spain.
"The rebound in equities around the world earlier pushed the euro higher, but it's been running into offers between $1.3710 and $1.3720," said John McCarthy, director of foreign exchange at ING Capital Markets in New York.
On Wall Street, shares closed lower, capping earlier gains in the euro, which has become a proxy for risk appetite among currencies in the developed world.
"There are still grave concerns about the sovereign debt situation in Europe. So the general economic tone is negative for equities, negative for risk, but positive for the dollar," McCarthy added.
In late afternoon trading, the euro <EUR=> was little changed at $1.3657, after earlier hitting a session peak of $1.3714.
The euro has shed nearly 10 percent from a 15-month high of $1.5145 reached in late November over growing fears Portugal and Spain could face the same fiscal problems as Greece.
Concerns persisted despite this weekend's reassurance from European officials at the Group of Seven rich nations meeting that they would ensure Greece sticks to its budget-cutting plan.
Analysts said more was needed to reassure markets euro zone debt problems would not upset a global economic recovery. For details, see [ID:nTOE61702V]
"The G7 didn't have a concrete plan and the comments lacked substance to restore market confidence," said Carol Hurley, senior market strategist at Lind-Waldock, a futures brokerage firm in Chicago. "So I think the (strong dollar) trend remains intact and the market will tend to sell rallies in the euro and buy dips in the dollar."
A Greek public sector union also warned of further strikes to protest austerity measures, prompting an increase in the cost of insuring Greece's sovereign debt. Greek government bond yield spreads over German benchmarks also widened. [ID:nLDE61717F] [GVD/EUR]
U.S. Commodity Futures Trading Commission data, meanwhile, showed investors increased bets on further dollar gains in the latest week. Net long positions in the dollar were at their highest in about 11 months. [ID:nN05162244] The net short euro position, meanwhile, rose to a record high, according to Barclays Capital and Scotia Capital data. <------------------------------------------------- For a graphic on euro short positions see here ------------------------------------------------->
Against a basket of currencies, the U.S. dollar <.DXY> was down 0.1 percent at 80.358, but not far from Friday's high of 80.683, its strongest since July 2009. Technical traders said the greenback had broken its 200-week moving average to trade above it for the first time since May 2009.
The dollar was down slightly against the yen <JPY=> at 89.28 while the euro <EURJPY=R> edged lower to 121.95 yen.
Among higher-yielding currencies, the Brazilian real rose against the dollar, which fell 0.3 percent to 1.8750 <BRL=>, while the Norwegian crown <NOK=>, taking its cue from higher oil prices, gained with the dollar falling 0.3 percent versus the crown to 5.9667.