* Euro briefly lifted by report of new aid deal for Greece
* Then pares gains as report denied by Greek officials
* Profit taking kicking in on euro shorts after sharp fall
(Adds quote, updates prices)
By Neal Armstrong
LONDON, May 10 (Reuters) - The euro was steady versus the dollar in volatile trade on Tuesday as conflicting reports emerged of a potential new aid deal for debt-laden Greece to help it meet its funding requirements in the next two years.
The euro briefly gained, hitting the day's high at $1.4379 after Dow Jones News reported that Greece could receive aid totalling 60 billion euros as soon as June, but pulled back after Greece denied the report. [ID:nATH006063
However, it stayed above Monday's three-week low of $1.4254 and short-term was well supported above its 55-day moving average, now at $1.4245, but analysts said it was still vulnerable to escalating concerns about euro zone debt.
The euro was flat at $1.4361. Traders said a semi-official name was seen selling around the day's highs.
"There is a lot of uncertainty over the longer-term outlook, which is why we are seeing such volatile moves," said Lee Hardman, currency strategist at BTM-UFJ.
"There is not sufficient risk premium priced into the euro at the moment. Continued peripheral troubles, plus moderating euro zone growth could pull back European Central Bank rate hike expectations, taking away the euro's main support."
Adding to the uncertainty over the situation in Greece, a German MP questioned whether Greece had met the terms for its next aid tranche, while a source said EU and IMF inspectors have not yet concluded whether Greece is meeting its targets.
"This seems a bit early to come up with something concrete. I think we'll get more posturing before a deal can be agreed on Greece," said Gavin Friend, currency strategist at nabCapital.
On Monday, Standard and Poor's cut Greece's rating to B from BB-, saying its projections suggest that debt reductions, or haircuts, of between 50 and 70 percent of the bonds' original value could be needed to make Greece's debt burden sustainable.
Coupled with a media report last week -- later emphatically denied by European policymakers -- that Greece may be considering exiting the euro, it highlighted the dilemma of how best to extricate the country from its debt quagmire.
PROFIT TAKING
Traders said macro accounts had started to take profit on their euro short positions, with other market players also thinking selling was becoming overdone in the near term after the euro tumbled from a 17-month high of $1.4939 hit last week.
"We need a fresh trigger to go lower in the euro from here. I think we're in a $1.43/1.46 range for now," said Geoffrey Yu, currency strategist at UBS.
But Hardman at BTM-UFJ said it was "quite likely" the euro had formed a medium-term top and any move back into the high $1.40s could result in heavy selling by longer-term investors.
The euro's 55-day moving average is seen as major support as it has not traded below that measure since mid-January. But a break there could put it on course to test support around $1.4150 -- near its April 18 low of $1.4156 and a 38.2 percent retracement of the January-May rise at around $1.4145.
Recent euro weakness, initially triggered by disappointment over a lack of hints on a rate hike next month from the European Central Bank last week, accelerated as panic selling in the commodities market prompted investors to shun risk.
Because rising oil and commodities have been at the root of inflation that has pushed the ECB to tighten policy, declines in oil prices could make investors scale back their expectations of more rate hikes.
The euro was up around 0.3 percent against the yen at 115.63 yen after sliding to a 6-week low in Asian trade at 114.77 yen.
The dollar was up 0.4 percent at 80.59 yen, well above a seven-week trough of 79.57 yen hit last week. Versus a currency basket the dollar was steady at 74.713.
The Swiss franc fell to session lows against the dollar and the euro after Swiss CPI inflation rose 0.1 percent month-on-month in April, well below forecasts and denting the chance of a Swiss rate hike in June.
(Additional reporting by Jessica Mortimer; Editing by Ron Askew)