* Dollar adds to overnight gains
* Weaker-than-expected manufacturing, home sales data still support case for Fed rate hike
* Euro recovers footing after falling near $1.0600 (Updates prices)
By Dion Rabouin
NEW YORK, Nov 23 (Reuters) - The dollar rose to an eight-month high on Monday, as unusually hawkish comments from a regional U.S. Federal Reserve president over the weekend further cemented expectations of an interest rate hike next month.
San Francisco Fed President John Williams on Saturday cited a "strong case" for raising rates when Fed policymakers meet next month, as long as U.S. economic data does not disappoint. Williams, a voting member of the Federal Open Market Committee, also said the Fed could raise rates in the near term, but should do so at a gradual pace.
His comments overshadowed Monday's lackluster U.S. manufacturing and housing reports.
Data showed on Monday that manufacturing activity slowed to the lowest level since October 2013 and existing home sales declined 3.4 percent last month, but both surveys continued to support long-term stability in the U.S. economy. urn:newsml:reuters.com:*:nL1N13I142
Existing home sales are up 3.9 percent from a year ago, on track to record the best annual sales in eight years. The drop in manufacturing was pronounced but remained supportive of the sector expanding at a solid pace.
"While (the data) failed to meet expectations, it's not going to do anything to drastically change the story of what's been driving markets, which is the diverging monetary policy (between the Federal Reserve and European Central Bank)," said John Doyle, director of markets at Tempus Consulting in Washington.
"If you were on the side of Fed raising interest rates in December this will do little to change your mind from that happening."
Markets largely expect the Fed to raise U.S. interest rates next month, strengthening the dollar, while the ECB is expected to further ease its currency at its Dec. 3 meeting.
The dollar index .DXY , which measures the greenback against six major currencies, rose 0.4 percent, touching 100.00, an eight-month high not far from this year's peak of 100.390.
The euro EUR= fell below $1.06, hitting a new seven-month low against the dollar. It was last down 0.3 percent at $1.0610.
Robust sentiment surveys from the euro zone offered the single currency support ECONEZ , but traders and analysts were reluctant to predict any bounce before an ECB meeting next month that is expected to ease monetary policy.
The Japanese yen JPY= also was slightly weaker against the dollar ahead of a week lightened in trading terms by a holiday in Japan on Monday and the Thanksgiving holiday in the United States.