* Dollar firms after slide Friday on China comments
* Dollar index <.DXY> holds near 2-week low, Aussie down
* Japan industry output surges, matches April's 50-yr record
By Aiko Hayashi
TOKYO, June 29 (Reuters) - The dollar regained some ground on
Monday after falling broadly late last week on a renewed call by
China for a super-sovereign reserve currency, placing higher-risk
currencies such as the Australian dollar under pressure.
But activity was subdued ahead of significant data this week,
including U.S. employment numbers on Thursday, which investors
are awaiting to see if a months-long rally in riskier assets such
as commodity-linked currencies and shares is sustainable.
Debate about an alternative international currency has heated
up in recent months. On Friday, although China's central bank did
not mention the dollar by name, it said it was a serious defect
in the international monetary system that one currency should
dominate. []
Central bankers gathering in Basel at the weekend also
discussed the dollar's role, although China's central bank
governor Zhou Xiaochuan said its foreign exchange reserve policy
was always quite stable, without sudden changes. []
"The dollar's status as the key currency won't change right
away as moves like this need time and international support,"
said Shinichi Hayashi, a currency trader at Shinkin Central Bank.
China, the world's top holder of foreign exchange reserves,
is also working with Brazil on a currency arrangement to allow
exporters and importers to settle deals in their local
currencies, their central banks said. []
Despite the doubts building about the dollar's reserve
status, foreign central bank holdings of U.S. Treasuries have
soared by $115 billion in the past eight weeks, a near
record-pace of demand and showing persistent buying.
The euro fell 0.4 percent to $1.3990 <EUR=> after gaining
about 0.6 percent on Friday, still below its 2009 peak of $1.4339
set in early June.
The dollar index, a gauge for the greenback's performance
against six other major currencies, rose 0.4 percent to 80.250
<.DXY>, holding above last week's two-week low of 79.562.
Asian share markets fell as a drop in oil prices weighed on
energy-related shares and investors stayed on the sidelines ahead
of the end of the second quarter.
Japan's industrial output rose 5.9 percent in May, matching a
jump in April that was its fastest pace since 1953, as car and
electronics production recovered from a deep slump. But analysts
said the outlook remained murky once the effects of government
stimulus wear off. []
It was the third month in a row of increase, after a big
slump, but the rise was smaller than the 7.0 percent improvement
forecast by the market and Tokyo's Nikkei average <> fell 1
percent. []
"Today's data is neutral in terms of monetary policy. It
signals that the worst is over and the economy is unlikely to
come to the edge of the precipice again, but it's still too early
to call a sustainable recovery," said Junko Nishioka, chief
economist at RBS Securities.
Against the yen, the dollar inched up 0.2 percent to 95.45
yen <JPY=> and the euro eased 0.4 percent to 133.44 yen
<EURJPY=R>.
Japanese importers' demand at the Tokyo commercial fix
earlier in the day helped lift the dollar against the yen, a
trader at a big Japanese bank said.
Still, traders expect activity to be cautious ahead of U.S.
jobs data on Thursday. Some doubt the pace of job losses will
slow quite as quickly as a smaller-than-expected fall of 345,000
showed in May. The data is on Thursday rather than Friday due to
a U.S. holiday.
The market is also awaiting the Bank of Japan's tankan
business survey due out on Wednesday. It is likely to show the
mood among big Japanese manufacturers improved from record lows a
quarter ago. []
U.S. corporate earnings will be also in focus, with aluminium
producer Alcoa Inc <AA.N> set to kick off the earnings season
when it reports on July 7.
The Australian dollar <AUD=D4> fell 1 percent to $0.7990,
after gaining 0.6 percent on Friday, and dropped 0.8 percent to
76.20 yen <AUDJPY=>.
Traders said the Australian dollar and other higher-yielding
currencies came under pressure as the U.S. dollar gained after
sharp falls made late last week.
Some cited disappointment that Japanese industrial production
came in weaker than expected, as Japan is the single biggest
importer of Australian resources. []
(Editing by Joseph Radford)
