* Dollar index down 0.3% for the week * U.S. manufacturing activity powers ahead in early May (Updates prices, market activity, comments to U.S. market open; changes dateline, previous LONDON) NEW YORK, May 21 (Reuters) - The dollar edged higher on Friday, boosted by encouraging U.S. manufacturing data, but remained on track for a weekly loss as traders’ concerns about taper talk in U.S. Federal Reserve minutes moderated. The dollar has given back much of the advance it made after a mention in minutes from the Fed’s April monetary policy meeting of possible future discussions on paring back stimulus, raised hopes U.S. interest rate raises might come earlier than previously thought. “Taper concerns have faded rather quickly, it would seem,” Shaun Osborne, chief currency strategist at Scotiabank, said in a note. The U.S. currency found some support after data showed U.S. factory activity gathered speed in early May amid strong domestic demand. The dollar index, measuring the greenback against a basket of six currencies, was 0.27% higher at 90.036. The index hit a four-month low earlier in the session. Still, investors remain largely convinced the Fed is in no hurry to pull back from its accommodative stance and the dollar may be in for further weakness. “We continue to expect the USD to remain soft while U.S. yields remain contained,” Osborne said. For the week, the dollar index was on pace for a loss of 0.3%. A loosening of COVID-19 restrictions helped surveys of German services activity and French business activity come in better than expected in May, although they had little effect on the euro. The British pound edged lower on Friday but was on track for its third consecutive week of gains against the dollar, helped by a series of data releases reinforcing market expectations for a strong economic recovery in the United Kingdom. In cryptocurrencies, a recovery from Wednesday’s crash lost some momentum. Bitcoin traded down 3.4% to 39,257.86. Ether likewise lost steam and fell 6.1%. Both are on course for weekly losses deeper than 15%. Reporting by Ritvik Carvalho Additional reporting by Tom Westbrook in Singapore Editing by Jonathan Oatis Our Standards: The Thomson Reuters Trust Principles.