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TOKYO, Aug 31 (Reuters) The yen fell on Friday as expectations of yen selling linked to launches of mutual funds weighed on the Japanese currency, while concerns about troubled credit markets kept other investors' risk appetite low.

Activity was subdued as market participants awaited a speech later in the session by Federal Reserve Chairman Ben Bernanke for clues about prospects for a cut in the central bank's benchmark federal funds rate.

Bernanke reiterated on Wednesday that the Fed was ''prepared to act as needed'' to ensure credit market problems do not adversely affect the economy, fuelling speculation for a rate cut.

Dissatisfied with low interest rates at home, Japanese individual investors have been aggressively putting their money into foreign assets through investment trusts. Nineteen new mutual funds are expected to be launched in Japan on Friday with some of them featuring foreign assets.

But losses in the yen were limited as other market participants were reluctant to bet against the Japanese currency as they believe Japanese exporters were looking for chances to sell the dollar above 116.50 yen, traders said.

''Demand for foreign currencies from investment trusts and exporters' needs to sell the dollar are playing a tug-of-war,'' said Hideki Amikura, a forex manager at Nomura Trust and Banking.

Government data showed on Friday that Japan's core consumer prices fell 0.1 percent in July from a year earlier, in line with economists' consensus forecast.

Japan's unemployment rate fell to a nine-year low of 3.6 percent in July, against forecasts of 3.7 percent.

The dollar edged up 0.1 percent from late Thursday U.S. trade to 116.00 yen The euro rose 0.2 percent to 158.40 yen The rise against the yen helped the European single currency to climb 0.15 percent to $1.3655 Reuters RKM VP0608