* Dollar index up 0.2 pct after overnight falls
* Comments from Fed official dampens chance of Sept move
* Commodity currencies biggest fallers as oil prices ease (Updates prices, adds comments)
By Patrick Graham
LONDON, Sept 13 (Reuters) - The dollar recovered in early European trade on Tuesday, having dipped the previous day following a speech by Federal Reserve policymaker Lael Brainard that solidified the view that U.S. interest rates are unlikely to rise this month.
There had been much speculation among traders that the speech by Brainard, announced at the last minute before the U.S. central bank's pre-meeting blackout period, could see one of its most convinced policy doves flip to support monetary tightening.
In the event, she instead warned against the Fed removing support for the economy too quickly, knocking the greenback half a cent lower. The effect had faded by the start of European trade and the dollar was 0.1 percent higher against both the yen and the euro and 0.2 percent against a basket of currencies.
"We've had so much information and misinformation (on the chances of a rate rise) that the market is just in wait-and-see mode," said Neil Mellor, a strategist for Bank of New York Mellon (NYSE:BK) in London.
"We've had a number of supportive comments from the policy hawks, but they are still struggling to convince the market. The dollar is right in the middle of the recent ranges."
At 0730 GMT, the euro traded at $1.1221. EUR=EBS The dollar fetched 101.965 yen. JPY=
Futures pricing for a rise in September was down below 20 percent ahead of the Brainard speech, meaning that only a genuine change in her previously extremely cautious views on raising rates would have shifted pricing significantly.
"We can stick with our main scenario that the Fed won't raise rates in September," said Koichi Yoshikawa, executive director of finance at Standard Chartered (LON:STAN) Bank's Tokyo branch. "All the talk about a possible rate hike in September turned out to be noise."
Fed Funds rate futures 0#FF: are now pricing in only about a 15 percent chance of a hike at the meeting on Sept 20-21, according to CME Group's (NASDAQ:CME) FedWatch Tool. That was down from about 35 percent in late August, when some Fed officials openly discussed the possibility.
While Brainard's comments also played in to a generally more upbeat mood on stock markets, a fall in oil prices kept the Australian, Canadian CAD= and New Zealand NZD= dollars under pressure, with all three down more than half a percent.
Those currencies are closely linked to investors' appetite for risk globally and have done well since the easing of some concerns over China at the end of January. But the mood has been shakier in the past month.
There was limited market reaction Chinese numbers that showed the fastest rise in industrial output in five months, offering further signs of an improvement in economic activity.
Comments by Reserve Bank of Australia Assistant Governor Christopher Kent in the margins may have hurt the Aussie. AUD= He said the currency had not fallen as much as the RBA expected since 2013, largely because of aggressive easing policies by many other central banks around the globe.