* Reports Italian parties seeking debt forgiveness hits euro
* Dollar index at highest since Dec 19 (Updates market action, adds comment)
By Saqib Iqbal Ahmed
NEW YORK, May 16 (Reuters) - The dollar added to recent gains against a basket of currencies on Wednesday to touch a five-month high, supported by relatively robust U.S. economic data in recent days, while the euro was hit by reports that a likely future Italian government would seek debt forgiveness from European creditors.
The dollar index, which measures the greenback against a basket of six other currencies, was up 0.19 percent at 93.393, after rising as high as 93.632, its highest since Dec. 19.
The greenback has risen about 1.7 percent this month, boosted by a view that the Federal Reserve will outpace most major central banks in policy normalization.
"There's been some improved sentiment on conditions in the U.S. compared with other parts of the world," said Sireen Harajli, foreign exchange strategist at Mizuho in New York.
"Essentially, the dollar is stronger mostly because the rest of the world is not," said Harajli.
U.S. factory output rose in April, although new estimates of manufacturing and overall industrial production showed less growth in prior months than initially believed.
The U.S. currency got a boost on Tuesday when strong U.S. consumer spending numbers sent 10-year Treasury yields surging to a seven-year peak of 3.095 percent.
On Wednesday, the move in the greenback was largely driven by news out of Europe, said Alfonso Esparza, senior currency analyst at OANDA in Toronto.
The euro was 0.3 percent lower against the greenback at $1.1801, its lowest since December, after reports that Italy's anti-establishment 5-Star Movement and anti-immigrant League may ask the European Central Bank to forgive 250 billion euros ($294 billion) of debt.
The euro was 0.31 percent lower against the Swiss franc, after dropping to a five-week low of 1.1772 francs. The Swiss franc typically attracts capital in times of uncertainty.
"Whenever there is euroskepticism on the rise you are definitely going to see this type of a move in the euro," said Esparza.
"It's just one of the factors that reminds us again that European growth is slowing down," he said.
Euro zone inflation slowed in April, European statistics agency Eurostat said on Wednesday, confirming an earlier flash estimate and adding to the headache of European Central Bank policy makers seeking to phase out monetary stimulus.
Against the yen, the dollar was down 0.11 percent at 110.22 yen, but still close to the highest it has been since early February.
Japan's economy contracted more than expected at the start of this year, suggesting growth has peaked after the best run of expansion in decades, unwelcome news for a government struggling to get traction for its reflationary policies.
Sterling fell towards its lowest point of the year against the dollar and was down 0.18 percent on the day, amid fresh worries about Britain's Brexit negotiations and relatively modest UK wage growth.
Reporting by Saqib Iqbal Ahmed Editing by Nick Zieminski and Lisa Shumaker