TOKYO, Aug 14 (Reuters) The euro hit a one-month low against the dollar on Tuesday as the European

TOKYO, Aug 14 (Reuters) The euro hit a one-month low against the dollar on Tuesday as the European Central Bank's hefty cash injections in the money market cooled expectations for a September interest rate rise in the euro zone.

The yen rose across the board as investors further trimmed positions in risky carry trades on persistent jitters about bank and fund losses from problems in the U.S. subprime mortgage sector.

The low-yielding Japanese currency has been widely used by speculators as a cheap source of funds to buy higher-yielding currencies in carry trades.

The yen jumped against the New Zealand and Australian dollars, while heading towards a four-month high versus the euro, as trade thinned by summer holidays saw volatility that exaggerated market moves.

Activity was subdued in Tokyo as many Japanese investors and traders are away for ''obon'' summer holidays this week.

Traders do not expect higher-yielding currencies to rebound for the time being, saying speculators are unlikely to start building risky carry trade positions again in the short term.

''Market players find it difficult to do carry trades now as market volatility remains high,'' said a trader at a Japanese trust bank.

The euro struck a fresh one-month low against the dollar at $1.3602 on electronic trading platform EBS in early Asian trade before recovering to $1.3615.

The single European currency fell to 160.70 yen from 160.95 yen in late U.S. trade on Monday. It hit a four-month low of 159.98 yen last week.

The yen's rise against the euro and other higher-yielding currencies pulled down the dollar against the yen.

The dollar was down 0.2 percent at 118.00 yen, edging towards a four-month low of 117.19 yen hit late last week.

CENTRAL BANK ACTION The New Zealand dollar fell after New Zealand retail sales volume fell for the first time in one and a half years in the second quarter, suggesting consumer spending may be slowing and supporting expectations that interest rates will remain on hold in the coming month.

The kiwi fell 0.7 percent to $0.7335 after hitting a fresh 2-1/2-month low of $0.7322.

Against the yen, the kiwi fell 0.9 percent as investors unwound yen carry trades.

The Aussie traded 0.4 percent lower versus the yen, while sterling slipped 0.2 percent.

Concerns about a money market crunch due to problems linked to the subprime problem have retreated as the ECB and other central banks around the world have been providing funds to the global banking system in the past week.

The ECB injected 47.67 billion euros ($65.3 billion) into euro-zone money markets on Monday in a one-day tender to replace Friday's special three-day tender for 61.05 billion euros.

But the ECB's action to stave off a money market squeeze has led investors to question the chances of the ECB raising interest rates to 4.25 percent next month from the current 4 percent.

''Investors are pretty much doubting a September rate hike by the ECB,'' said Tsutomu Soma, a senior manager in the foreign securities department at Okasan Securities.

''Investors are trying to square long euro positions as a rate hike would not be consistent with fund injections to the money market,'' Soma said.

Before the fears of a money market crunch due to the subprime issue rattled financial markets, most investors were convinced the ECB would further boost interest rates next month.

Those expectations fell below 50 percent on Friday before rising a little this week.

In a Reuters survey 13 of 17 dealers said the ECB would raise interest rates in September.

In the same survey, most respondents said they did not foresee any need for another large fund injection into the overnight markets. Click on ($1=.7296 Euro) REUTERS MP ND1140