* Kiwi falls after RBNZ comments on overvalued currency
* RBNZ also says to impose home loan lending limit from Oct
* Dollar slips vs yen as Tokyo shares slide
* Near-term focus on Fed minutes due Wednesday
SINGAPORE, Aug 20 (Reuters) - The yen edged higher on Tuesday as Tokyo shares retreated, while the kiwi fell after New Zealand's central bank announced home lending restrictions and said the local dollar was overvalued.
The U.S. dollar fell 0.3 percent versus the yen to about 97.29 yen, coming under pressure as Japan's benchmark Nikkei share average extended losses in the afternoon to 2.6 percent.
The yen has had an inverse correlation to moves in Tokyo equities in recent months, and currency traders have been keeping an eye on Japanese shares for directional hints on the yen.
The big mover on the day, however, was the New Zealand dollar, which fell 1 percent to $0.7986.
The move followed home lending restrictions announced by New Zealand's central bank governor, Graeme Wheeler, to help cool off an overheated market without having to raise interest rates.
"Broadly speaking, what the currency has responded to is the fact that these measures are likely to mean the RBNZ can keep policy unchanged for longer," said Hamish Pepper, currency strategist for Barclays in Singapore.
Markets also reacted to a change in rhetoric, with the RBNZ describing the kiwi as overvalued, rather than high as it had in the recent past. Wheeler also said that while a rate rise might be needed next year, it wasn't needed now.
Another underperformer was the Australian dollar, which fell 0.7 percent to $0.9061.
The Aussie extended its losses after minutes of the Reserve Bank of Australia's last policy meeting was seen as dovish.
Although the U.S. dollar gained ground against the New Zealand and Australian dollars, the greenback slipped slightly versus the euro, which rose 0.1 percent to $1.3350.
The euro eased 0.2 percent versus the yen to about 129.91 yen, down from a two-week high of 131.05 yen set on Monday on trading platform EBS.
Recent weakness in U.S. and Japanese equities, due partly to market expectations that the Fed could start scaling back its monetary stimulus as early as next month, have helped support the yen, a traditional safe haven currency that tends to attract demand in times of market stress.
Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, said recent turmoil in emerging markets such as India, Brazil and Indonesia has also helped spur demand for the yen.
"The yen tends to attract buying when tensions in the market increase," he said.
Okagawa said demand for yen was also offsetting the dollar-positive impact from a recent rise in U.S. Treasury yields and capping the dollar's moves versus the Japanese currency.
Investors are now looking ahead to minutes of the Federal Reserve's July meeting due on Wednesday, awaiting fresh clues on whether the Fed will taper its bond-buying programme in September.