FOREX-Dollar holds gains after climb; Aussie slides

                                
 * Dollar index near 1-month high on safe-haven demand
                                
 * Australian dollar falls after inconclusive election
                                
 * Euro vulnerable as Weber says ECB should extend easy policy
                                
 By Rika Otsuka
                                
 TOKYO, Aug 23 (Reuters) - The U.S. dollar held steady on
Monday, retaining most of the gains it made late last week when
growing worries about the global economy prompted investors to
park funds in the world's most liquid currency, while the
Australian dollar slid on political uncertainty.
                                
 The dollar index, a gauge of the greenback's performance
against six major currencies, climbed to a one-month high of
83.304 on Friday. The index was down 0.2 percent at 82.918 <.DXY>
in Asian trade, with resistance seen at 83.451, its July 21 high.
                                
 The Australian dollar dropped after neither of the major
parties in Australia won an overall majority in Saturday's
election to form a government, leaving the country facing its
first hung parliament in 70 years. [ID:nSGE67L021]
                                
 The euro was on the defensive, hovering near a five-week low
against the dollar and a seven-week trough against the yen, both
hit on Friday when European Central Bank Governing council member
Axel Weber said the ECB should extend its loose monetary stance,
stoking worries about the euro zone economy. [ID:nLDE67J0IR]
                                
 "The market's main focus has shifted back to the euro zone
from the U.S. economy's weakness," said a senior trader at a
Japanese brokerage. "The dollar is supported by safe-haven
demand, managing to stay above a 15-year low against the yen."
                                
 Speculators trimmed bets against the dollar in the week
ending Aug. 17, with the value of the greenback's net short
position shrinking to $14 billion from $17.82 billion the
previous week, according to Commodity Futures Trading Commission
and Reuters data.
                                
 Meanwhile, the same data showed on Friday speculators sharply
increased bets against the euro and slightly cut their long yen
positions. [IMM/FX]
                                
 The euro was little changed on the day at $1.2716 <EUR=>,
within sight of a five-week trough of $1.2664 struck on trading
platform EBS on Friday. Support is seen at $1.2605, a 50 percent
retracement of its rise from a four-year low of $1.1876 marked in
June to its August peak of $1.3334.
                                
 The single European currency slipped 0.3 percent to 108.53
yen <EURJPY=R>, hovering near a seven-week low of 108.25 yen hit
on EBS on Friday.
                                
 The dollar fell 0.3 percent to 85.35 yen <JPY=>, within
striking distance of 84.72 yen hit earlier this month, its lowest
since July 1995.
                                
 The greenback has been soft against the Japanese currency,
partly due to a sharp fall in U.S. treasury yields on the back of
persistent fears a U.S. economic recovery is losing its momentum.
                                
 The dollar/yen rate has a high correlation with U.S. and
Japanese government bond yield spreads, which are now narrowing.
                                
 Japanese Prime Minister Naoto Kan and Bank of Japan Governor
Masaaki Shirakawa talked about the yen and agreed to work closely
in a phone conversation on Monday, but offered few clues on
whether further monetary easing was a possibility.
[ID:nTOE67M02F]
                                
 "The yen is expected to stay on a gradual rising trend and
there is the possibility it will strengthen beyond 84 yen (vs the
dollar) as the market is looking at Japanese authorities being
too tame on economic policy," said Ayako Sera, market strategist
at Sumitomo Trust & Banking.
                                
 "There is no energy in the market to reverse the yen's
strength unless big surprises occur."
                                
 At the same time, caution about possible intervention by
Japanese authorities to rein in the yen's strength is making
speculators hesitant about selling the greenback against the yen,
traders said.
                                
 The Australian dollar slid as low as $0.8833 in early Pacific
trade, a one-month trough, in a knee-jerk reaction to the
nation's general election. But the currency soon trimmed losses
thanks to some bargain-hunting, rising to $0.8922 <AUD=D4>, down
0.2 percent on the day.
                                
 The Aussie received some help after Britain's Sunday Times
reported that beverage giant SABMiller <SAB.L> <SABJ.J> is
considering buying the beer operation of Australian brewer
Foster's Group <FGL.AX> for about $10.9 billion. [ID:nSGE67L02A]
 (Additional reporting by Kaori Kaneko; Editing by Joseph
Radford)