FOREX-Dollar surrenders gains, resumes broad slide

* USD sell-off resumes with downtrend seen intact

* Fed's Evans says focus is on an accomodative policy

* Aussie bounces after Wall Street stocks recover

By Anirban Nag

SYDNEY, Oct 23 (Reuters) - The U.S. dollar surrendered slim gains on Friday, resuming its fall towards 14-month lows against a basket of currencies on expectations interest rates will remain low in the U.S.

Traders expect some position-squaring to continue, with the dollar vulnerable on expectations of low rates, a view reinforced after Chicago Federal Reserve President Charles Evans said on Thursday the Fed's focus remained on an accommodative rate policy.

Evans, who is a voting member, added that a recovery is going to be unsatisfactory in 2010 and the Fed will be monitoring dollar movements.

"The U.S. dollar looks vulnerable to a short, brutal move to the spring 2008 lows," said David Watt, senior currency strategist at RBC Capital. The dollar index had hit of a low of 70.7 in March 2008.

Watt added a pullback in demand for riskier assets and higher-yielding currencies was likely to be temporary and the dollar index would struggle to stay above the 75 level.

The index was down 75.046, just above a 14-month low of 74.94 struck earlier in the week.

Since April, the dollar index has lost around 12 percent with selling picking up in recent weeks as Asian central banks diversified into other currencies, and on growing talk that the U.S. dollar was fast emerging as the funding currency for leveraged carry trades.

In recent days, U.S. officials have stepped up rhetoric about a strong dollar while European officials have fretted over the euro's appreciation.

But with U.S. unemployment near 10 percent, investors expect rates to remain anchored at record lows while signs of stronger growth prompt central banks elsewhere in the world to raise rates.

Low rates make the U.S. dollar less attractive than higher-yield currencies more closely correlated with economic recovery.

The euro was steady at $1.5035 on Thursday, with traders saying there was good support around $1.50.

The yen slipped to 91.40 per dollar, having fallen 0.3 percent in the previous session. The yen could come under a bit of pressure on expectations Japanese investors will step up overseas bond purchases. Traders are eyeing support at 91.75 and then at around 92.30 per dollar.

The U.S. dollar held on to gains at C$1.0467. It had risen to C$1.0545 on Thursday but eased back after the Bank of Canada's quarterly monetary policy report suggested officials think the economy can cope with a stronger currency..

Meanwhile, the Australian dollar inched up to $0.9284, recovering from lows after stock markets bounced on strong U.S. corporate results, with the undertone bullish on expectations of steep Australian rate rises in coming months.

Datawise, investors will look to the Eurozone October flash PMI data and German IFO index. Also scheduled are UK third-quarter gross domestic product numbers while in the U.S. Federal Reserve chief Ben Bernanke speaks at 1230 GMT. (Editing by Jonathan Standing)