* Euro zone inflation data eyed for hints on ECB outlook
* Focus also on lingering tensions in Ukraine
* Kiwi hits 7-week high on strong business confidence poll
* China's yuan may have biggest one-day loss
By Shinichi Saoshiro and Masayuki Kitano
TOKYO/SINGAPORE, Feb 28 The New Zealand dollar
hit a seven-week high on Friday as an upbeat business survey
underscored expectations for a rate hike next month, while the
euro eased ahead of a closely-watched reading on euro zone
China's yuan looks set for its biggest daily loss on record
on Friday, as the central bank stepped up its intervention to
weaken the currency ahead of a key government meeting next week.
In midday trades, the yuan briefly weakened to 6.1808 per
dollar, more than 0.8 percent below Thursday's close.
The yen, meanwhile, pushed higher as risk sentiment
faltered, with Chinese equities slipping 0.5 percent and
Japan's Nikkei share average shedding 0.9 percent,
market players said.
In addition, a trader for a European bank in Tokyo said
month-end flows from Japanese banks helped drag the dollar lower
versus the yen.
The dollar fell 0.5 percent to about 101.65 yen,
while the euro shed 0.5 percent to 139.27 yen.
A big mover on the day was the Chinese yuan,
which looked set for its biggest daily loss on record as the
central bank stepped up its intervention to weaken the currency
ahead of a key government meeting next week which may be used as
a platform to unveil more market reforms.
Directed at squeezing out speculative plays betting on
continued yuan gains, the central bank has set about actively
weakening its currency since mid-last week by using a mix of
weak daily fixings and asking its agent banks to buy dollars.
The euro eased 0.1 percent to about $1.3699, but
stayed above Thursday's two-week low of $1.3643.
Jitters over tensions in Ukraine have weighed on the euro in
recent sessions, as investors flocked to safe haven currencies
such as the Swiss franc..
The euro's near-term fortunes are seen hinging on euro zone
inflation data due later on Friday. The inflation reading will
be closely watched for clues on whether the European Central
Bank will cut interest rates at its policy meeting next week.
One-third of economists polled by Reuters have pencilled in
a cut in the ECB's refinancing rate from the current 0.25
percent at its March 6 meeting.
The kiwi dollar rose 0.2 percent on the day to $0.8389.
Earlier, it touched a peak of $0.8415, its highest level since
One possible resistance level lies at $0.8433, a peak hit on
Jan. 14. A rise beyond there would take the New Zealand dollar
to highs that haven't been seen since late October.
An ANZ Bank survey showing that New Zealand business
confidence surged to a near 20-year high in February fuelled the
rally in the New Zealand dollar.
The survey suggests that interest rate hikes by New
Zealand's central bank are needed soon, Greg Gibbs, head of Asia
Pacific markets strategy for RBS in Singapore, said in a
"While these are probably fully priced, the data increase
the risk of somewhat faster hikes... Given the yield seeking
nature of the current market near term risk is a topside break
of the range in NZD over the last six months," he added.
The Reserve Bank of New Zealand is expected to start its
long-awaited tightening cycle at its March 13 policy review,
lifting its cash rate from a record low 2.5 percent by 25 basis