* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar index hovers near 2-week high
* Strong U.S. housing, employment-related data supportsgreenback
By Shinichi Saoshiro
TOKYO, May 17 (Reuters) - The dollar held near a two-weekhigh against its peers on Friday, supported by strong U.S.economic data and a bounce in Treasury yields.
The dollar index versus a basket of six major currencies .DXY stood at 97.836 after reaching 97.882 on Thursday, itshighest since May 3.
The greenback reached the two-week peak on robust U.S.housing data and a weekly jobless claims report which pointed tosustained labour market strength in the world's biggest economy. urn:newsml:reuters.com:*:nL2N22R1F7urn:newsml:reuters.com:*:nLNSGGEF42
The U.S. currency also drew strength as its counterpartssuch as the euro and pound were dogged by bearish factors.
"The euro is weighed down as the (euro) zone is saddled withweak economic fundamentals and Italian political concerns, whileits all about Brexit for the pound," said Junichi Ishikawa,senior FX strategist at IG Securities in Tokyo.
Italy's right-wing League party will "tear apart" EuropeanUnion rules which are "strangling" the country if it scores wellin a May 23-26 European parliamentary election, Italian DeputyPrime Minister Matteo Salvini said on Thursday. urn:newsml:reuters.com:*:nS8N22Q099
Salvini's challenge to EU fiscal rules has been a key sourceof the worry for the euro, which has fallen 0.5% this week.
The safe-haven yen also stood to benefit from the woes inEurope and elsewhere.
"Fiscal risks related to Italy is a theme sure to captivatespeculative market players. Any resulting 'risk off' couldbenefit the yen not only against the euro, but against thedollar as well," said Yukio Ishizuki, senior currency strategistat Daiwa Securities.
The euro was steady at $1.1178EUR= after falling to$1.1166 overnight, its lowest since May 6.
The common currency was up 0.15% at 122.91 yenEURJPY= . Ithas retreated 0.5% against the yen this week, during which itslid to 122.06, lowest since early January.
Britain faces a potentially disorderly exit from theEuropean Union as Prime Minister Theresa May has struggled tokeep her Brexit deal and her premiership.
The possibility of a chaotic departure from the EU haspushed the pound to a three-month trough of $1.2783GBP=D4 onFriday. Sterling last traded at $1.2787, having slumped 1.6%this week.
The dollar extended overnight gains, adding 0.1% to 109.955yenJPY= .
Against the safe-haven yen the greenback fell to a3-1/2-month low of 109.020 at the start of the week when a tradewar between the United States and China intensified.
The Australian dollar was steady at $0.6893AUD=D4 .
The Aussie was in close reach of a 4-1/2-month trough of$0.6886 plumbed on Thursday after soft domestic employment dataheightened expectations for an interest rate cut by the ReserveBank of Australia.
Elsewhere, the Turkish lira edged down 0.3% to 6.0670 perdollar TRYTOM=D4 after the United States on Thursdayterminated Turkey's preferential trade treatment that allowedsome exports to enter the country duty free. Softening the blowslightly, Washington halved its tariffs on Turkish steel importsto 25% from 50%. urn:newsml:reuters.com:*:nL2N22T019
The 10-year U.S. Treasury note US10YT=RR yielded 2.405%,having pulled back from a near two-month low of 2.354% brushedthe previous day. (Reporting by Shinichi Saoshiro; Editing by SimonCameron-Moore) ((firstname.lastname@example.org; Reuters Messaging:email@example.com+813-6441-1774))