* Liquidity thinning ahead of U.S., London holiday weekends
* Euro pinned down by expectations of ECB easing steps
* Dollar supported as upbeat U.S. data lifts U.S. Treasury yields
* Investors eye Thai situation after military coup
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, May 23 (Reuters) - The dollar steadied near one-week highs against the yen and advanced on the euro on Friday after promising U.S. housing and factory activity data nudged U.S. Treasury yields away from recent lows.
The dollar index, which tracks the greenback against a basket of rivals, edged up to 80.264.
Against the yen, the dollar was flat at 101.72, not far from its Thursday high of 101.82 and well off a 3-1/2 month trough of 100.805 yen plumbed on Wednesday.
"There's not a lot of top-tier data out, and it's also going to be a long weekend in London and the U.S., so I imagine liquidity will be thinning out," said Sue Trinh, currency strategist at RBC Capital Markets.
Risk appetite was subdued, she said, as the Thai coup and renewed tensions on the Korean peninsula "seems to have hit FX markets a little harder than other asset markets, with a few exceptions, such as dollar/yen."
The usually safe-haven yen did not get much support from news of Thailand's bloodless army coup late on Thursday. The baht edged up on Friday to 32.54 per dollar, helped by demand from exporters for settlements.
Also on Thursday, North Korean artillery fired at least one shot which landed near a South Korean navy patrol ship but did not hit the vessel, according to a military official in Seoul. {ID:nL3N0O8347]
The euro eased about 0.1 percent to $1.3645,within sight of a three-month low of $1.3634 set on Wednesday.
In the U.S. session on Thursday, investors found an excuse to buy back the dollar after data showed U.S. home resales rose in April and the supply of properties on the market hit its highest level in nearly two years, promising signs for the housing market.
Financial data firm Markit also said its preliminary or "flash" U.S. Manufacturing Purchasing Managers Index rose to 56.2 in May from 55.4 in April. Economists polled by Reuters expected a reading of 55.5.
U.S. Treasury yields edged up on the data with the benchmark yield briefly hitting a 1-1/2 week high of 2.57 percent. In Asian trade, the 10-year yield stood at 2.55 percent, flat from the U.S. close.
ECB, ELECTIONS LOOM OVER EURO
The euro drooped under growing expectations that the ECB will take further easing steps next month.
Analysts polled by Reuters this week expect the ECB will cut its main interest rate and push the deposit rate below zero in an attempt to stop inflation from slowing any further.