* Cross/yen up on short-covering but off highs
* Dollar gains on yen but loses ground to euro
* Eyes on shares, Shanghai choppy, investors cautious
By Kaori Kaneko
TOKYO, Aug 18 (Reuters) - The yen fell on Tuesday, retreating
from its highest levels this month against the dollar and euro
and losing ground against commodity-linked currencies, although
twitchy Asian share markets made trade choppy.
Eyes were on stocks after Monday's volatile session in which
shares in Shanghai <> lost 5.8 percent and currencies
associated with risk-trades, such as the Australian and New
Zealand dollars, shed more than 1 percent.
The euro and the Aussie and kiwi dollars all rose about half
a percent against the Japanese currency and clawed back some lost
ground against the dollar as investors covered short positions
built in the sell-off the previous day, dealers said.
"Gains in yen crosses today were a recovery from excessive
losses the previous day, rather than investors being actively
engaged in risk trading," said Ayako Sera, a market strategist at
Sumitomo Trust & Banking.
Analysts said volumes appeared to be thin, making trading
choppy. The dollar rose 0.3 percent from late U.S. trade to 94.84
<JPY=>, after dipping to its lowest in nearly three weeks on
Monday at 94.19 yen.
The euro climbed 0.5 percent to 133.77 yen <EURJPY=R> after
touching its lowest in nearly a month at 132.51 yen on Monday.
Against the dollar it rose 0.2 percent to $1.4103 <EUR=>.
The Australian dollar rose 0.3 percent to $0.8228 <AUD=D4>
after falling more than 1.3 percent the previous day. Last Friday
the Aussie hit an 11-month high of $0.8479.
Against the yen, it advanced 0.6 percent to 78.05 yen
<AUDJPY=R> after losing nearly 2 percent on Monday.
It dipped briefly after minutes from the Australian central
bank's latest board meeting showed policy-makers were concerned
that the strength of household demand could prove temporary,
particularly if it tightened too early. []
Asian stock markets seesawed after sharp falls on Monday but
dropped into the red as the day wore on.
Markets have been watching China closely to gauge how far it
can help economies emerge from recession while the turnaround in
the United States takes time, and the closedly watched Shanghai
Composite index <> was volatile, edging up later.
"Everyone knows it's no wonder Chinese shares need a
correction as they have risen sharply," said Kosuke Hanao, head
of treasury products sales at HSBC.
"But the point is whether their current fall will be within a
correction in the bull market or not."
The Shanghai index is up more than 50 percent since the start
of the year but has shed about 18 percent after hitting a
14-month high two weeks ago.
"The market needs to examine whether hopes that China will
support the global economy will remain intact from now on. There
are some positive signs from data in industrialised nations, and
we need to see if they become more substantial," Sera at Sumitomo
Trust & Banking said.
For Tuesday, the German ZEW index of analyst and investor
confidence at 0900 GMT is the main data out of Europe.
The U.S. will release housing starts and permits for July and
the producer price index for July, both at 1230 GMT. []
[]
(Additional reporting by Anirban Nag in Sydney; Editing by
Michael Watson)
