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Written by: Staff

TOKYO, Sep 14 (Reuters) The yen firmed against the dollar and euro on Thursday with traders reluctant to tilt positions too far either way ahead of a Group of Seven meeting at the weekend.

The yen, which hit a five-month low earlier this week, pared some of its losses in the previous session on position unwinding ahead of the G7 finance ministers' meeting in Singapore.

Traders have been wary that the yen might become a focal point at the gathering after a German finance ministry official said last week that its recent weakness would be discussed, spurring a rise in the Japanese currency.

With pre-event jitters making traders cautious, there was little reaction to a Reuters survey showing that business confidence among Japanese manufacturers worsened in September from three months before.

The dollar stood at 117.46 yen as of 0101 GMT, down slightly from around 117.70 yen in late U.S. trading.The euro was steady at $1.2697 and easier at 149.15 yen.

The Reuters Tankan, a monthly survey of leading indicators, produced a diffusion index of plus 30 for manufacturing firms in September, unchanged from August but down from 39 in June.

The reading suggests the Bank of Japan's influential quarterly tankan survey may show a deterioration in confidence in its September edition after a slight rebound in June, results that some analysts said bode ill for the yen.

''The number of samples is different (from the BOJ Tankan) but I think the results point to Japanese yields remaining stable at low levels and are negative for the yen,'' said Tomoko Fujii, senior economist and strategist for Bank of America.

Elsewhere, the New Zealand dollar jumped after the Reserve Bank of New Zealand left interest rates steady at 7.25 percent as expected, but took a surprisingly hawkish tone in a statement accompanying its decision.

The RBNZ said it had become less confident that no further tightening would be needed given rising inflationary pressures, adding that the outlook for monetary policy had become more finely balanced and that it saw no prospect of any easing for ''some considerable time''.

The New Zealand dollar stood at 65.45 U.S. cents, up from around 64.60 just before the RBNZ statement.


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