FOREX-Dollar buoyed by U.S. data, Portugal woes

* Dollar gains on positive job, ISM services data

* Portugal woes hit euro, CDS spreads at record highs

* EU approves Greek plan, euro surrenders early gains

* Markets look to ECB, BoE decisions on Thursday (Updates prices, adds comment)

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 3 (Reuters) - The dollar climbed broadly on Wednesday after improving U.S. job and industry data while fears Portugal could be the next euro zone country to face a debt crisis lifted the greenback against the euro.

Concerns about Portugal pushed the single currency below a key $1.3900 figure, while the cost of insuring Portuguese government bonds against default rose to a record 196 basis points, according to CMA DataVision.

Traders said credit default swap spreads widened after Portugal's debt agency IGCP cut its planned T-bill placement to 300 million euros from the planned 500 million as yields spiked higher compared with January's placement. [ID:nLDE6121G4]

Market turmoil widened after the European Union vowed to hold Greece to an austere plan to tackle the most severe debt crisis in the single currency zone.

"The lightning rod has been passed on (from Greece) to Portugal today and this appears to be one of the factors weighing on the euro and in general helping lift the U.S. dollar," said Marc Chandler, global head of currency strategy of Brown Brothers Harriman in New York.

In late afternoon trading, the euro fell 0.4 percent to $1.3900 , after hitting session lows at $1.3891, according to Reuters data.

"The subsequent price action today makes the euro's firmer tone this week look corrective in nature," Chandler added.

News that the European Commission approved Greece's deficit-cutting plan initially boosted the euro, although its CDS swap spreads got back above 400 basis points. Analysts said the news did little to ease worries about wider fiscal problems in the euro zone.

Jacob Oubina, senior currency strategist, at Forex.com in Bedminster, New Jersey said aside from Greece and Portugal, Spain is another concern given the country's struggles to cut its fiscal deficit, which is expected to climb to 9.8 percent of gross domestic product in 2010.[ID:nLDE6121MU]

SPAIN'S CDS SPREADS WIDEN AS WELL

According to Oubina, Spain's five-year CDS spreads rose to 148 basis points on Wednesday, roughly a one-year high, citing CMA Datavision. The record was 170 basis points hit last year.

Analysts said these problems should continue to undermine the euro over the next few months even if a global recovery gains momentum and risk appetite improves.

Against the yen, the dollar rose to two-week highs at 91.28 yen and last traded at 90.96, up 0.6 percent.

Gains in dollar/yen were helped by improving economic data on Wednesday, with the rise in January of the Institute for Supply Management's index of non-manufacturing companies to 50.5 from 49.8 in December.

Earlier in the session, data showed the pace of U.S. job losses in the private sector slowed last month. [ID:nN03150829]

"The rally in dollar/yen confirms that forex traders are buying dollars on the hope that the U.S. economy returned to positive job growth last month," said Kathy Lien, director of currency research at GFT in New York.

"Based upon the latest reports, there are many reasons to believe that the labor market improved -- the question is by how much," she added.

The ICE Futures' dollar index <.DXY>, a measure of the greenback's performance against a basket of major currencies, rose 0.5 percent to 79.385, not far from a six-month high of 79.534 struck earlier this week.

Also on Wednesday, the Norwegian central bank held its benchmark rate steady at 1.75 percent, an outcome that had been expected after a rate increase last December.

The euro was last up 0.1 percent against the Norwegian crown at 8.1553 while the dollar was up 0.6 percent at 5.8665 .

Central bank policy decisions for the euro zone and the UK are due on Thursday, with the Bank of England is expected to halt its quantitative easing program.

(Additional reporting by Nick Olivari; Editing by Andrew Hay)