* Brainard says U.S. supports Japan's efforts to end deflation
* Investors await G20, BOJ meetings this week
* Aussie steadies after drop to 3-month low
By Lisa Twaronite
TOKYO, Feb 12 The yen wallowed close to recent lows in Asian trading on Tuesday after a U.S. Treasury official implied tolerance of a weaker Japanese currency as a side-effect of efforts to whip deflation.
The dollar was buying 94.30 yen, slightly up from late North American trade on Monday when it rose as high as 94.465 yen on the EBS trading platform, its highest level since May 2010.
The euro was slightly lower at 126.28 yen after it jumped 2 percent against the Japanese unit on Monday, moving toward a 34-month high of 127.71 yen hit on Wednesday last week.
U.S. Treasury Undersecretary for International Affairs Lael Brainard said the United States supports Japanese efforts to end deflation and re-invigorate growth.
She also stressed that the Group of 20 nations needs to deliver on the commitment to move to market-determined exchange rates and refrain from competitive devaluation.
Her remarks came ahead of a meeting of euro zone finance ministers on Monday and the G20 meeting later in the week, which are likely to focus on whether some countries are deliberately trying to weaken their currencies.
Against a backdrop of rising rhetoric about a currency war, the Group of Seven nations are considering issuing a statement this week reaffirming their commitment to "market determined" exchange rates, two G20 officials said on Monday.
France said on Monday that euro zone finance officials should discuss the rising strength of the euro, but several ministers played down the issue and the G7 was expected to call for "market-determined" exchange rates.
Japanese Finance Minister Taro Aso told a news conference after a cabinet meeting on Tuesday that Japan would tell the G20 that its monetary and economic policies are aimed at beating deflation.
The euro also benefited from comments from European Central Bank council member Jens Weidmann, who said discussions about an overvaluation of the euro are simply a diversion from governments' task of sorting out their economies. He added that a currency policy aimed at weakening the euro would lead to higher inflation.
Against the dollar, the euro was slightly down North American levels, buying $1.3398, closer to its Feb. 8 low of $1.3353 than to its 15-month peak of $1.3711 set on Feb. 1.
The Bank of Japan will hold its regular meeting on Wednesday and Thursday, and is expected to keep monetary policy steady for now.
Still, markets are pricing in more easing to come as the government of Prime Minister Shinzo Abe has kept steady pressure on the central bank to take bold action to achieve its new 2 percent inflation target.
The Australian dollar was steady at 96.66 yen, in sight of its four-and-a-half year peak of 97.42 set a week ago.
Against the U.S. dollar, the Aussie was slightly higher, last buying $1.0258 after falling to a three-month low of $1.0249.
The People's Bank of China has been a regular buyer of the Aussie, but with China closed for most of this week for the Lunar New Year holiday, it may be especially vulnerable to a selloff, said Boris Schlossberg, managing director of FX strategy at BK Asset Management
A break below $1.0250 suggests a bearish technical development and may open the path to a test of 1.0150, he said in a note to clients.