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TOKYO, Oct 30 (Reuters) The yen rose against the dollar on Monday in the wake of soft U.S. growth data and as traders looked to the release of a Bank of Japan economic outlook report for clues about when Japanese interest rates will climb further.

The yen also received a reprieve following comments by Japan's top financial diplomat on Friday that traders regarded as a verbal attempt to stem falls in the currency.

''I think what we're seeing is some unwinding of short yen positions,'' said a senior trader for a Japanese bank.

''It's the type of yen buying that has more to do with position adjustment rather than any positive factors.'' The dollar stood at 117.30 yen as of 0325 GMT, down from around 117.60 yen in late U.S. trading on Friday, when it fell to a 1-month low of 117.13 yen on electronic trading platform EBS.

The euro fell to 149.27 yen from around 149.80 yen, off the record high of 150.80 yen hit on Friday.

The yen showed little reaction to data showing Japanese industrial production fell 0.7 percent in September from a month earlier, a result mostly in line with a median market forecast for a decline of 1.0 percent.

The euro slipped to $1.2725, still within sight of Friday's high of $1.2751, the highest in over three weeks.

The U.S. Commerce Department said on Friday that U.S.

economic growth in the third quarter slowed to 1.6 percent, its weakest pace in over three years.

The data strengthened expectations that the Fed would not raise interest rates again and stirred some speculation that they might even cut rates in early 2007 to boost growth.

SHORT YEN POSITIONS The yen got a lift on Friday, when Hiroshi Watanabe, vice finance minister for international affairs, told Reuters that he did not expect the yen to weaken further given Japan's healthy economic fundamentals.

Although any actual currency intervention to prop up the yen was unlikely, the comments were enough to make traders cautious about selling the yen too aggressively, said the senior trader for a Japanese bank.

''I don't think anyone thinks authorities will intervene now,'' the trader said, but added that the comments likely helped to trigger some short-covering in the yen.

Currency speculators built positions against the yen to a record 137,290 contracts in the week to Oct. 24, U.S. Commodity Futures Trading Commission data showed on Friday.

Traders said the yen could gain further if the BOJ's semiannual outlook on the economy and prices, due on Tuesday, strengthens expectations for the BOJ to raise rates by the year-end.

The market will also tune in to comments by BOJ Governor Toshihiko Fukui on Tuesday after a one-day policy meeting at which the central bank is widely expected to hold rates at 0.25 percent.

Some traders said that the Japanese currency gained support on Friday from speculation that the Swiss National Bank was adding yen to it reserves.

Data posted on the SNB's Web site showed that the central bank trimmed the share of dollars in its foreign exchange reserves in the latest quarter, while raising its allocation to other currencies.

The SNB has currency reserves of around $36 billion, according to the International Monetary Fund.

The yen got a boost earlier this month, when Russia's central bank said it had started buying yen for its reserves.

REUTERS PKS DS1141