* Dollar inches up from near 3-week low vs euro
* Sources say China wants FX reserve proposals debated at G8
* Chinese official says dollar is main reserve currency
* Forecast for 363,000 U.S. jobs lost in June
* ECB meets, no changes expected
By Charlotte Cooper
TOKYO, July 2 (Reuters) - The dollar edged up from close to
three-week lows on Thursday as the market awaited monthly jobs
figures as a guide to recovery in the U.S. economy but also kept
a watchful eye on debate about reserve currencies.
The greenback fell on Wednesday, propelled by news that China
was seeking debate about proposals for a new global reserve
currency at next week's Group of Eight meeting. []
China's vice foreign minister said on Thursday he had not
heard of such a request and that the dollar was the main global
reserve currency and he hoped it would remain stable.
But he said Beijing "of course" hoped for reserve currency
diversification in the future. []
The dollar ticked higher after the remarks but analysts said
any central bank reserve diversification out of dollars that
might take place, or be taking place, would be a slow process.
"There have been conflicting comments and this has been
confusing the market," said Mitul Kotecha, global head of FX at
Calyon in Hong Kong.
"It's going to go back and forth. We will see more
diversification but I don't think anything's going to happen
quickly because it would almost be like shooting yourself in the
foot."
The euro edged down 0.2 percent to $1.4117 <EUR=> after
touching its highest since early June at $1.4202 on Wednesday,
when it gained 0.8 percent on the day.
Questions over the dollar's reserve status keep resurfacing
to plague it at a time when U.S. government debt is ballooning,
making countries which park some of their foreign reserves in
U.S. Treasuries nervous.
In the first quarter of this year, the dollar made up 64.9
percent, or $2.6 trillion, of the roughly $4 trillion of global
reserves whose composition is known, according to IMF data this
week. [] and [].
G8 sources said on Wednesday that China had asked to discuss
reserve currency proposals at the Italy summit and the issue
could be referred to briefly in the summit statement, although
whether it would get that far remained an open question.
But analysts say many countries hold the view it would be
hard to abandon the dollar and any reforms would be a process of
many years. []
The dollar was steady 96.60 yen <JPY=>, locked well within
its 93.50-100 yen range of the past three months, while the euro
slipped 0.3 percent to 136.35 yen <EURJPY=>.
Foreign investors sold a net 195.1 billion yen ($2 billion)
of Japanese stocks in the week to June 27, turning net sellers
for the first time since the May 10-16 week, capital flows data
showed on Thursday. []
The dollar index <.DXY>, which measures the greenback's
performance against a basket of six major currencies, edged up
0.2 percent after hitting a three-week low this week.
THE MAIN EVENT
The U.S. economy is expected to have shed 363,000 jobs in
June, more than 345,000 lost in May, and the unemployment rate is
forecast to have risen to 9.6 percent from May's 9.4 percent.
[]
The data, due at 1230 GMT, comes on a Thursday rather than a
Friday as usual because July 3 is a holiday in the United States.
U.S. private employers slashed a bigger-than-expected 473,000
jobs in June, according to a report from ADP Employers Services
on Wednesday, making the market wary that the government's data
may show more lost jobs than forecast.
"The ADP number was worse than expected so now there might be
some downside risk in payrolls which makes it harder to take
large positions," said Yuki Sakasai, a currency strategist at
Barclays Bank Tokyo.
"Liquidity is low so any negative or positive surprises could
exaggerate moves in currencies ahead of the long holiday in the
U.S."
The dollar rose in the wake of the previous U.S. non-farm
payrolls report in early June, which showed the United States
shed far fewer jobs in May than the market was predicting, giving
rise to speculation that U.S. rates could go up sooner than
expected.
That speculation has largely faded, with economic data
continuing to show a mixed picture, but the market is always wary
ahead of payrolls figures because they help determine market
views on the pace of economic recovery.
The European Central Bank holds a rate-setting meeting on
Thursday, with no changes expected. Policy makers are
expected to keep the main refinancing rate at 1 percent and to
take stock of measures taken so far to tackle the recession.
[]
(Additional reporting by Kaori Kaneko; Editing by Joseph
Radford)
