Dollar near 2-mth high vs yen on Japan rate doubts

TOKYO, Dec 27 (Reuters) The dollar held near a two-month high against the low-yielding yen on Wednesday as more lacklustre Japanese data kept doubts simmering about whether the Bank of Japan would bump up interest rates in January.

Japanese retail sales in November fell 0.1 percent from a year earlier, government data showed in the morning. That was below the median forecast in a Reuters poll for a rise of 0.5 percent, suggesting consumption in Japan remains sluggish.

The dollar had gained 0.3 percent against the yen on Tuesday on mixed Japanese inflation and spending data, and as U.S.

dealers returning from Christmas holidays, had few other factors to focus on with European financial markets still closed.

''It's a bit confusing at the moment. We were thinking (the BOJ) might hike the rate next month but I think the tone is a little bit different now,'' said Hidenori Kato, head of forex sales and trading at Societe Generale in Tokyo.

In early Tokyo trade, the dollar was at 119.10 yen just below the two-month peak of 119.23 yen scaled on Tuesday and in sight of the 2006 high of 119.88 yen struck in October.

The euro was little changed at $1.3100 after slipping 0.3 percent the previous session, when the dollar found favour as traders covered short positions in the U.S. currency.

The single European currency was nearly flat at 156.00 yen in sight of the record high of 156.42 yen marked last week.

The high-yielding New Zealand dollar bought 70.05 U.S. cents, near a one-year high of 70.32 cents.

Reuters SBA VP0625