TOKYO, Aug 21 (Reuters) The yen edged higher against the dollar on Tuesday, taking a pause in its b

TOKYO, Aug 21 (Reuters) The yen edged higher against the dollar on Tuesday, taking a pause in its broad-base slide in the past session after last week's cut in the Federal Reserve's discount rate triggered a strong recovery in global share prices.

The Fed's surprise action helped reverse last week's sharp yen rally sparked by a wave of unwinding in risky carry trades that involved borrowing the yen cheaply to fund purchases of higher-yielding assets elsewhere.

But investor risk appetite stayed subdued as there are uncertainties as to whether the U.S. central bank's action will succeed in restoring confidence in credit markets which have suffered losses from U.S. subprime mortgage problems.

The higher-yielding Australian dollar and New Zealand dollar fell sharply against the dollar and the yen as market players dumped more risky carry trades.

''Market participants do not look as they have restarted carry trades,'' said a trader at a Japanese trust bank. ''They continue to have fears that market turmoil is not over yet.'' Movements in global stock markets stay the centre of investor attention, with further gains in share prices expected to boost the dollar and other currencies against the yen, traders said.

The dollar dipped 0.1 percent against the yen to 114.75 yen from levels in late U.S. trade, but stayed well above a 14-month trough of 111.60 yen struck on Friday.

The euro dipped against the dollar to $1.3460 from $1.3475.

The European single currency eased 0.2 percent versus the Japanese currency at 154.45 yen.

The Australian dollar dropped 0.8 percent against the U.S.

currency to $0.8005.

The New Zealand dollar was down 0.8 percent at $0.6935.

Investors awaited a meeting by Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and Senate Banking Committee Chairman Chris Dodd on Tuesday as they will discuss conditions in financial markets.

The closed-door meeting is to take place at 1400 GMT and Dodd, a Democrat from Connecticut, is expected to hold a press conference afterwards.

The Fed on Friday cut the discount rate it charges on direct loans to banks by half a percentage point to 5.75 percent, saying credit market tightening could slow U.S. growth.

Reuters CS VP0635