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TOKYO, June 1 (Reuters) The dollar dipped against the yen on Thursday but clung to much of the gains made after minutes from the Federal Reserve's latest policy meeting suggested the central bank was still concerned about inflation.

Although the minutes from the May 10 meeting showed that policy makers were not certain how much higher interest rates should climb, if at all, a mention that inflationary pressures were increasing helped reinforce expectations for more rate rises.

While such expectations could support the dollar, a rise above 113 yen -- a level it has not reached since May 5 -- could prove elusive, at least until the market gets a clearer sense of the Fed's stance, traders said.

''When the market gets to around these levels, people start thinking that finally there might be a break above 113 yen,'' said a dealer at a major Japanese bank.

''But if you ask me whether it will break beyond that level today, I think you have to expect for now that it will remain stuck in range,'' he said.

A trader at a Japanese trust bank said that options-related dollar offers would likely emerge near 113 yen.

Countering that, some yen-selling from Japanese mutual funds could occur again as it did during Asian trading on Wednesday.

In early Tokyo trade, the dollar stood at 112.55 yen, down slightly from the late New York level around 112.65 yen and Wednesday's high near 112.70 yen.

The euro dipped to 144.20 yen from around 144.30 yen. It was little changed at $1.2810.

Comments expected from Bank of Japan Policy Board member Hidehiko Haru later on Thursday could provide trading incentives for the Japanese currency.

He is due to meet business leaders on Japan's southern island of Okinawa, then hold a news from around 0500 GMT.

Market players now expect the BOJ to raise its key overnight call rate from around zero as early as July.

For further clues to the Fed's stance on rates the market is focusing on the U.S. nonfarm payrolls report due on Friday, which will give an update on the strength of the U.S. labour market.

The Fed, which has raised rates 16 times in a row since mid-2004 to 5 percent, is seen in a difficult position of having to weigh the risk for higher inflation against concern over a slowdown in the housing sector.

Reuters VJ VP0605