FOREX-Yen nears 2-1/2 year low vs dollar, Aussie firmer
* Dollar/yen pares earlier losses and edges higher
* Yen not far from previous day's 2-1/2 year low vs dollar
* Firmness in regional equities weighs on yen
By Masayuki Kitano
SINGAPORE, Jan 29 (Reuters) - The yen on Tuesday slipped back toward a 2 1/2 year low struck a day earlier against the dollar, hurt by signs of upbeat sentiment toward risky assets, while the Australian dollar rose on data showing a rebound in Australian business confidence.
The dollar rose 0.1 percent against the yen to 90.99 yen , not very far from the previous day's high of 91.26 yen, the greenback's strongest level versus the Japanese currency since June 2010.
The greenback fell as low as 90.40 yen earlier, pressured by dollar-selling, possibly from Japanese exporters, ahead of the 0100 GMT Tokyo fixing. Traders also cited dollar offers from options players.
The dollar however, later turned higher versus the yen as Asian equities and Tokyo shares bounced, traders said, adding that the greenback's uptrend versus the yen looked intact.
"I still think dollar/yen will head higher," said a trader for a European bank in Tokyo. "In the near term, I think the dollar will trade between 90 yen to 92 yen," he said.
Selling the yen has been a one-way trade since mid-November, based on expectations that Japanese Prime Minister Shinzo Abe would push the Bank of Japan into more forceful monetary easing to beat deflation.
"Everyone is only thinking about where to buy (the dollar) on dips," said a trader for a Japanese bank in Bangkok, referring to the dollar versus the yen.
The Australian dollar rose 0.2 percent to $1.0438, getting a boost after a survey showed that Australian business confidence rebounded sharply in December.
The euro rose 0.1 percent versus the yen to about 122.32 yen , not far from Monday's high near 122.90 yen, the euro's strongest level against the Japanese currency since April 2011.
Against the dollar, the single currency held steady at $1.3452, hovering close to an 11-month high of $1.3480 set on Friday on trading platform EBS.
The euro had gained a boost late last week on news about euro zone banks' early repayments of three-year loans to the European Central Bank, which suggested that parts of the euro zone banking system may be on the mend.
The euro, however, faces a series of major resistance levels near $1.35, including its 2012 high of $1.34869, the 50 percent retracement of its May 2011 to July 2012 drop near $1.3491, and the psychologically important $1.3500 level.
Sterling held steady at $1.5700, having hit a five-month low of $1.5675 on Monday.
Sterling has been weighed down by worries about a weak UK economy and prospects of more monetary easing by the Bank of England.
"The prospect of more activist monetary policy is not exactly an encouraging one for GBP, certainly not as it comes on top of a host of other negative developments - an economy that is triple-dipping, a government that is struggling to cut its deficit, and soul-searching about the UK's role within the EU," wrote analysts at JPMorgan in a note.
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