FOREX-Yen rises after Japan plays down foreign bond buying talk
* Aso says not considering foreign bond buying by BOJ
* Dollar/yen failure to clear 33-month high points to solid resistance
* Uncertainty on next BOJ Governor may curtail yen selling
* Euro soft after Draghi repeats wariness over appreciation
* Dollar/yen pares losses to 0.1 pct
TOKYO, Feb 19 (Reuters) - The yen rose on Tuesday after Japanese ministers played down talk of foreign bond buying by the country's central bank, a day after Prime Minister Shinzo Abe said such a policy could be one option for monetary easing.
Finance Minister Taro Aso told a news conference that he was not considering foreign bond purchases, while Economy Minister Akira Amari said Abe's comments on Monday simply referred to policy options countries have in general.
Their comments sent the dollar as low as to 93.56 yen , though it pared much of the losses to last trade at 93.90 yen, 0.1 percent below its late European session levels. U.S. financial markets were closed on Monday for the President's Day holiday.
While sentiment towards the yen is weak, the dollar has hesitated to re-test a 33-month high of 94.47 yen set last week, due in part to selling by option players hedging their barrier option positions at 94.50 yen.
"The fact that the dollar/yen couldn't break above last week's high yesterday points to the strength of the resistance," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
Some strategists also said the yen's fall could lose momentum for now as investors became wary of betting on further yen weakness until there is more clarity on the next Bank of Japan governor.
Economy Minister Amari said on Tuesday the government will decide on Bank of Japan's new governor and two deputy governors after Prime Minister Abe returns from a trip to the United States on Feb. 21-24.
Sources have told Reuters that former top financial bureaucrat Toshiro Muto is the leading candidate to become Japan's next central bank governor, replacing Masaaki Shirakawa.
"Whoever becomes governor, the BOJ will have to take bold easing steps. I don't think the yen's downtrend has changed, though its pace might slow a little bit from now," said Seiya Nakajima, chief economist at Itochu Corp.
The euro licked its wounds near a three-week low against the dollar after European Central Bank President Mario Draghi reiterated his wariness about the currency's appreciation.
The euro stood at $1.3343, little changed from late European levels and a tad above a three-week low of $1.3306 hit last Friday.
Speaking before the European Parliament, Draghi said the euro's exchange rate was not a policy target but was important for growth and stability, adding that appreciation of the euro "is a risk".
The euro has been under selling pressure in the wake of data recently revealing a deeper-than-forecast euro zone recession and on concerns about the outcome of an election in Italy at the weekend as Prime Minster Mario Monti's reforms have drawn criticism from all the political spectrums.
"Should the election lead to a hung parliament and raise doubts about whether Italy will pursue Monti's reform policy, that would give speculators such an easy chance to sell the euro," said Itochu's Nakajima.
Against the yen, the euro stood little changed at 125.25 yen , though it has lost a bit of momentum after hitting a 34-month high of 127.71 yen earlier this month, having gained almost 27 percent since mid-November at that point.
An immediate focus for the currency is the German economic sentiment index due at 11:00 a.m. (1000 GMT). Economists expect the ZEW index to improve to a 2-1/2-year high..
As the euro wilted, the dollar index held firm near a six-week high of 80.727 hit on Monday. It last stood at 80.653 but faces resistance from its 200-day moving average at 80.940.
The British pound was listless near a seven-month low of $1.5438 on Monday after a comment from Bank of England policy maker that the currency may need to fall further. It last stood at $1.5462.
Sterling is also coming under pressure from recent poor data that has stoked worries over another British recession, as well as speculation that incoming BoE chief Mark Carney may take drastic easing steps akin to the policies that Japan's government is pressuring the Bank of Japan to adopt.
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