(Refiles to correct spelling of dovish)
* Euro dips, still hurt by ECB meeting
* Dollar recovers after earlier weakness
* Higher yielding currencies perform well
* Yen gains after suspected Japan cronyism scandal
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, March 12 (Reuters) - The euro’s rally on Monday fizzled as a more-dovish-than-expected central bank meeting last week continued to weigh on the single currency, while a revival in risk appetite hurt the dollar against higher-yielding currencies.
Strong U.S. jobs numbers and receding fears over a trade war helped a rebound in markets, and when markets have rallied this year the euro has tended to benefit against the dollar, as traders bet investors will continue to put more money into a region where the economies are booming.
But the euro fell last week as the European Central Bank said inflation expectations remained subdued and that monetary policy would remain “reactive”.
After initially rising to a session high of $1.2341 on Monday, the euro dropped 0.1 percent to $1.2297. The single currency, after a strong start to 2018, remains below the three-year peak hit in February of $1.2556.
“The euro is still suffering in the aftermath of the ECB meeting,” said Alvin Tan, a currencies analyst at Societe Generale. “The cross currents are affecting the euro.”
The dollar, which has tended to fall when risk appetite is rising, meanwhile reversed its falls to rise slightly. The greenback against a basket of currencies rose 0.1 percent at 1130 GMT.
With little crucial economic data due in Europe, traders will focus on a meeting of the euro zone finance ministers on Monday for any comments on trade protectionism after President Donald Trump’s decision to impose some tariffs.
Many analysts remain bullish on the euro.
“With the euro zone enjoying a massive 3.5 percent GDP current account surplus and the euro not particularly volatile, we suspect it will be very hard for (euro zone) finance officials to talk down the euro,” said Viraj Patel, an FX strategist at ING.
The strong U.S. job growth data released on Friday was counterbalanced by slower increases in wages, resulting in money market traders sticking to bets that the Fed would raise interest rates three times this year, with only around a one-in-four chance seen for a fourth rate hike in 2018.
Higher-yielding currencies like the Australian and New Zealand dollars also rose, 0.2 percent and 0.3 percent respectively.
The yen, which tends to perform well when markets are anxious, gained as traders eyed a suspected Japan cronyism scandal involving the sale of state-owned land for its impact.
The name of Japanese Prime Minister Shinzo Abe’s wife was removed from documents regarding the issue, media said on Monday, as pressure mounted on the premier and his ally Finance Minister Taro Aso over a possible cover-up.
Abe has denied that he or his wife did favours for a school operator and has said he would resign if evidence was found that they had. Aso has apologised for his ministry’s actions over the documents but said that he had no intention of stepping down.
Market participants said the political developments in Japan helped temper gains in Japanese equities and lent some support to the yen.
The yen rose 0.2 percent to 106.58 yen, edging away from a one-week high of 107.05 yen set on Friday.
The dollar had risen against the yen last week as risk appetite improved on hopes for a breakthrough in the standoff over North Korea’s nuclear weapons programme, and reduced concern about an escalation in trade protectionism. (Reporting by Tommy Wilkes Additional reporting by Masayuki Kitano in SINGAPORE; Editing by Toby Chopra and Jon Boyle)