FOREX-Dollar lower vs euro in volatile trade on Geithner

* Geithner causes euro/dollar volatility

* Investors move quickly on SDR comment

(Recasts, adds details, adds comment, updates prices)

By Nick Olivari

NEW YORK, March 25 (Reuters) - The U.S. dollar slid against the euro on Wednesday after U.S. Treasury Secretary Timothy Geithner expressed openness to expanded use of an IMF currency basket even as he said the greenback would remain the world's reserve currency for a long time. [ID:nN25385009].

Investors initially interpreted his remarks as negative for the dollar, sending it to a session low against the euro.

China's central bank governor said earlier this month said the world should consider the special drawing right (SDR), a basket of dollars, euros, sterling and yen, as a super-sovereign reserve currency.

Geithner, responding to a question at a Council of Foreign Relations event in New York, said he had not read the Chinese proposal but added, "as I understand it, it's a proposal designed to increase the use of the IMF's Special Drawing Rights. I am actually quite open to that suggestion."

Analysts said the initial gyrations in the dollar were a mistake.

The market took Geithner's willingness to consider the SDR currency issue as a negative sign for the dollar, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in a note to clients. "This is most likely mistaken. Geithner admits to not having read China's proposal."

Chandler said President Barack Obama's recent comments about the dollar being fundamentally strong and there being no need of another reserve currency, is more of the underlying signal.

Obama said in a prime-time televised news conference on Tuesday: "I don't believe that there's a need for a global currency", and noted that the dollar was "extraordinarily strong right now". [ID:nN24347329]

The euro was last up 0.6 percent against the dollar at $1.3543 after going as high as $1.3649. It was trading at around $1.3495 when Geithner began speaking.

Geithner's comments completely overshadowed market influences earlier in the global session and other analysts were less kind to the Treasury Secretary.

"These contradictory statements are clearly the act of an amateur Treasury Secretary that has been thrust onto the public forum and is struggling with the need to be very particular in his choice of words," said Kathy Lien, director of currency research at GFT Forex in New York in a note.

"Geithner is learning the hard way about the impact that his comments can have on the currency market and despite his attempt to pacify investors, his words have left air of uncertainty in the U.S. dollar."