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TOKYO, May 30 (Reuters) The dollar fell against the yen and euro on Tuesday after a British newspaper reported that Don Evans, a possible successor to U.S. Treasury Secretary John Snow, was likely to favour a weaker dollar.

The Times of London said in an article in its online edition that Evans, a former U.S. commerce secretary, may fit the mould of past Treasury secretaries who have favoured a weaker dollar, given his political background.

The newspaper said that in the past 30 years ''those with an industrial or political background ... have been quite happy, indeed eager, to see the dollar decline''.

''The political-industrial complex likes a lower currency that helps American exporters,'' the article said.

It added: ''Don Evans seems to fit very comfortably into this latter category.'' Republican sources said last week that Snow will likely step down in June, and U.S. publications such as the New York Times and the Wall Street Journal have recently reported that Evans is a leading contender to succeed Snow.

''The story may prompt markets to focus on global imbalances and ways to fix them,'' said Hideaki Inoue, chief manager of forex at Mitsubishi UFJ Trust and Banking.

The dollar hit a one-year low of near $1.2970 to the euro earlier this month, as speculators had sold the dollar after the Group of Seven called for more appreciation in Asian currencies to reduce the U.S. trade deficit and surpluses in many Asian countries.

The dollar stood at 112.05 yen at 0530 GMT, off the day's high of around 112.80 yen.

The dollar briefly fell to around 111.90 yen earlier, and down from 112.24 yen in late European trade on Monday.

Traders said the dollar was also dragged lower after Japanese Economics Minister Kaoru Yosano said it was natural for the market to decide the dollar/yen rate, but that sharp movements in exchange rates were undesirable.

The euro stood at $1.2815 near its session highs, up from $1.2762 in late Europe.

Financial markets in New York and London were closed on Monday for holidays. Other European markets were open.

DISAPPOINTING OUTPUT DATA The yen had slipped earlier after Japan released industrial output data that was slightly below expectations.

Japan's industrial production rose 1.5 percent in April from a month earlier, compared with a median market forecast of a 1.8 percent rise.

''The figure came in a bit weaker than expected ... and may have spurred some speculative moves,'' said a trader at a Japanese trust bank.

While the output figures were not particularly strong, on the whole they supported expectations that the Bank of Japan will end its zero interest rate policy in the coming months, analysts said.

''The outlooks for production in May and June are both positive and there are no problems with the overall trend ... Expectations ahead of time may have been a bit too high,'' said Tomoko Fujii, a senior currency strategist for Bank of America in Tokyo.

The data showed that manufacturers expect their output -- the core component of industrial production -- to rise 0.2 percent in May and gain 1.3 percent in June.

''I don't think this will lead to a change in the Bank of Japan's scenario,'' Fujii said, adding that she expects the BOJ to lift the key overnight call rate from around zero in July.

REUTERS CS BD1438