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FOREX-Dollar slips to 2-month low vs yen on China data
* Cross/yen down after China data
* Japan investment trusts selling cited
* Doubts grow on ECB firepower
* Fed widely seen on hold
By Hideyuki Sano
TOKYO, Aug 1 (Reuters) - The dollar dipped to a two-month low against the Japanese yen on Wednesday after China's official manufacturing data poured water on hopes increased policy support may be helping to stem a slowdown in the world's second-largest economy.
The euro also eased against the dollar as disappointment over Chinese data added to nerves in a market already growing doubtful that both the Fed and ECB will -- or can -- do enough to spur their respective economies.
Optimism following comments from ECB President Mario Draghi last week that he would do whatever it takes to save the single currency is starting to wear thin.
"The market thinks Draghi said he would use his trump card. But there are doubts he can meet the market's high expectations," said Katsunori Kitakura, associate general manager at Sumitomo Mitsui Trust Bank.
The dollar fell to as low as 77.90 yen, its lowest in two months, and last stood at 77.99 yen, down 0.2 percent, while the euro fell 0.3 percent to 95.85 yen.
The euro fell 0.1 percent against the dollar to $1.2297 , down almost a full cent from its three-week high of $1.2390 hit last week.
China's official factory purchasing managers' index fell to an eight-month low of 50.1 in July from 50.2 in June, suggesting the sector is barely growing.
That prompted buying in the yen particularly against risk-sensitive euro and Aussie, while there was also talk the yen buying could be coming from Japanese investment trusts reducing currency exposure due to fund withdrawals from their customers.
With China data doing little to alleviate concerns about a slowdown in the global economy, the market is now focused on a policy announcement from the U.S. Federal Reserve at 1415 GMT.
The Fed is widely expected to stand pat on rates this time, although some diehard optimists believe it will lay out the groundwork for further bond purchases in order to spur a sluggish economic recovery.
On Thursday, the ECB will get its turn in the sun, with many market players expecting Frankfurt to revive its bond purchase programme, mothballed for months and opposed by the Bundesbank, to bring down elevated Spanish and Italian borrowing costs.
Still, market enthusiasm for further action from Europe, such as bond buying by the euro zone's rescue funds, has already dissipated somewhat amid continued objection from Germany.
Germany's finance ministry reiterated its view on Tuesday that there was no need to grant a banking licence to the euro zone's new bailout fund, a move that could enable it to buy virtually unlimited amounts of debt issued by troubled euro zone states.
"The euro could benefit momentarily if the ECB says it will buy bonds. But that will probably provide a good opportunity to the euro," said Minori Uchida, chief FX strategist at the Bank of Tokyo-Mitsubishi UFJ.
Many investors, analysts and traders think the impact of the ECB's action will be temporary unless there is a sustainable economic recovery in battered southern Europe.
But euro zone data on Tuesday continued to paint a dire picture for a region with joblessness in the euro zone hitting its highest level since the single currency was born.
The Aussie also slipped after the Chinese data, though it pared back much of the losses to last stand at $1.0488, almost flat on the day and off a four-month high of $1.0539 touched on Tuesday.
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