* Dollar posts first consecutive sessions of gains since June
* Euro retreats from $1.20 as investors take profit
* Chinese services growth pushes yuan higher
* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E
SINGAPORE, Sept 3 (Reuters) - The dollar clung to overnight gains on Thursday, as investors trimmed bets against the greenback and sold the euro on concerns that the European Central Bank was worried about its rise.
The bounce has lifted the greenback about 1% above the 28-month low it hit against a basket of currencies on Tuesday and brought its first back-to-back daily gains since June .
Few analysts expect it to hold for too long, but it was steady in the Asia session, edging higher on the Australian dollar and euro. The yuan rose, however, after an upbeat service sector survey added another string to China’s impressive recovery.
“You could put (the dollar bounce) down to a bit of a trend reversal, it’s had a long run downwards,” said BNZ senior markets strategist Jason Wong.
“But if it is a floor, it’s only a short term one...everyone’s pretty bearish dollars for good reason,” he said, pointing to a Federal Reserve’s policy outlook that will likely keep rates very low for a long time.
For about a fortnight now the dollar has been fighting to hold the line after dropping 10% from a March peak. As traders start to temper stretched bets on the euro it is tracking for its best week on the common currency in two months.
The euro fell about half a percent on Wednesday and has returned to test its overnight low of $1.1822 in Asia.
Remarks on Tuesday from ECB’s chief economist Philip Lane, who he said the exchange “does matter” for monetary policy, were the cue for selling even though there was no detail on what, if anything, the bank intends to do about the rising currency.
“The comment itself lacks specifics, making the interpretation questionable,” said OCBC Bank currency strategist Terence Wu.
“For now, do not rule out further extension towards $1.18, but we are cautious of calling for further downside from that level.”
The standout mover against the tide on Thursday was the yuan . It rose 0.1% to as far as 6.8250 per dollar in the onshore market in the wake of a service sector survey showing a fourth straight month of expansion in China.
The yuan has put on an eye-catching 4.5% gain over the past three months, which has investors beginning to think China’s policymakers are becoming more tolerant of a stronger currency as part of a broader shift away from export-driven growth.
“Chinese leaders will be less tempted to use yuan depreciation to stimulate growth as the export sector plays a secondary role in growth contribution, said Mizuho’s chief Asian FX strategist Ken Cheung.
Elsewhere the Japanese yen is gradually drifting back to where it was before Shinzo Abe resigned as Prime Minister as his close ally Yoshihide Suga firms as the favourite to succeed him.
Suga formally declared his candidacy for the Liberal Democratic Party leadership on Wednesday and is expected to persist aggressive fiscal and monetary stimulus.
The yen slipped marginally to 106.21 per dollar. The Australian dollar slipped 0.2% to $0.7321 and the kiwi was marginally lower for the day at $0.6761.
Ahead on Thursday are purchasing managers index figures in Britain, Europe and the United States and markets are also awaiting U.S. jobs data at 1230 GMT.
U.S. payrolls figures are due Friday, with soft private jobs data on Wednesday pointing to possible disappointment of economists’ expectations for 14 million new hires in August.
In emerging markets the dollar bounce kept pressure on the Indonesian rupiah amid worries about central bank independence, following a proposal to give the government more authority in monetary policy decisions. (Reporting by Tom Westbrook; Editing by Sam Holmes)
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