LONDON, Aug 6 - The dollar was down half a percent against the euro on Wednesday, nervous ahead of a major auction of U.S. Treasuries after a sale in the previous session drew weak demand and fuelled fears of rising interest rates. The tepid response to the sale of $24 billion in three-year U.S. Treasury notes on Tuesday drove the yield of the benchmark 10-year note higher, heightening investors' concerns that higher borrowing costs could crimp a pickup in the economy. This is likely to keep markets on edge ahead of Wednesday's 1700 GMT U.S. Treasury auction of $18.0 billion in five-year notes -- the second part of its three-part, $60.0 billion quarterly refinancing. At 0700 GMT, the dollar was down half a percent at one-week lows of $1.1420 per euro . It was down over a third of a percent on the yen at 119.80 yen . Tuesday's weak auction also sent Wall Street lower, wiping out positive sentiment from a surprisingly strong ISM non-manufacturing index. Futures pointed a possible recovery in U.S. shares later on Wednesday but the dollar was not responding.