* Traders expect dovish Yellen comments
* Dollar up against yen on Japan fin. minister comments
* Dollar pares losses on upbeat U.S. manufacturing data (Updates with fresh quotes, prices; changes byline, dateline from previous LONDON)
By Sam Forgione
NEW YORK, April 16 The dollar edged lower against the euro for the first time in four trading sessions on Wednesday ahead of Federal Reserve Chair Janet Yellen's comments, but rose against the yen on signs of future buying of Tokyo stocks by Japan's state pension fund.
Traders expect Yellen to strike a more dovish tone in afternoon comments before the Economic Club of New York. Minutes from the latest Fed policy meeting released last week were viewed as dovish, as were comments Yellen made on March 31 that the central bank's "extraordinary" commitment to boosting the economy would be needed for some time.
"Generally, the expectation is that (Yellen's) tone will be dovish," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto. Traders view the Fed's accommodative stance of keeping interest rates low as negative for the dollar.
The dollar rose against the yen after Japan's Finance Minister, Taro Aso, promised that "moves" by the $1.26-trillion government pension fund would become apparent from June, which helped boost the Nikkei stock index 3 percent.
"Policymakers are very concerned and very interested in making sure the Nikkei goes back up," said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York.
The inverse relationship between the Nikkei share index and the yen is well established. Foreign players traditionally sell the yen to hedge the currency risk in buying Japanese shares while a stronger Nikkei typically makes Japanese investors more comfortable with investing abroad, also negative for the yen.
The dollar pared some losses against major currencies, however, after data showed U.S. manufacturing output rose for a second straight month in March. Overall industrial production was up 0.7 percent, beating analysts' expectations, according to data from the Federal Reserve.
"It's another data point to confirm that the U.S. economy is doing relatively well and maintaining the growth expectations," said Schlossberg of BK Asset Management.
The euro was last up 0.05 percent against the dollar at $1.3821. The U.S. dollar index was last down 0.04 percent. The dollar was up 0.33 percent, meanwhile, against the Japanese yen at 102.25.
(Additional reporting by Patrick Graham in London; Editing by Meredith Mazzilli)