* Sources say Japan GPIF to boost stock allocation to over 20 pct
* Yen slips as Tokyo shares push higher on the GPIF report
* Aussie dollar hits 2-month low after weak Australian jobs data
* Euro holds steady above 9-month low, awaits ECB policy review (Updates prices)
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Aug 7 The yen sagged against the dollar on Thursday, coming under pressure on news Japan's Government Pension Investment Fund (GPIF) plans to increase its allocation to domestic equities.
The dollar rose 0.3 percent to 102.40 yen, pulling away from a 1-1/2 week low near 101.76 yen set on Wednesday.
The yen fell as Tokyo shares pushed higher after political sources told Reuters on Thursday that Japan's GPIF plans to allocate over 20 percent of its funds to domestic stocks compared with a current 12 percent target.
The sources familiar with the fund's plans said the GPIF will likely lower its weighting for Japanese government bonds to around 40 percent from a current 60 percent target, and may also increase investments in global stocks when it announces its new allocation plan sometime in the autumn.
Gains in equities can weigh on the safe-haven yen, as investors target riskier assets on expectations of making bigger returns.
The Australian dollar was a big mover on the day, sliding 0.9 percent to $0.9268 after data showed an unexpected jump in the domestic jobless rate. It fell to $0.9263 at one point, its lowest level since early June.
The Aussie dollar took a hit from surprisingly weak Australian jobs data, which showed that the jobless rate jumped to a 12-year high of 6.4 percent in July, a disappointing report that could revive speculation about another cut in interest rates.
Some market participants were sceptical that the weak jobs data would immediately alter the outlook for Australia's central bank to keep rates on holds for a while.
The Reserve Bank of Australia had kept its cash rate at a record low of 2.5 percent on Wednesday, marking a full year without a change.
The RBA is unlikely to change its policy stance based on one set of figures, especially since the jobs data is known to be volatile, said Divya Devesh, FX strategist for Standard Chartered Bank in Singapore.
"I don't expect to see any change in stance from them. I still think they will remain neutral in the coming months," Devesh said.
The euro held steady at $1.3385 ahead of the ECB's policy decision due later on Thursday.
On Wednesday, it had skidded to as low as $1.3333, its lowest level since last November as disappointing data from Italy and Germany soured sentiment toward the single currency.
The ECB is expected to leave interest rates on hold as it assesses the impact of stimulus launched in June, when it cut interest rates to record lows, became the first major central bank to charge banks for holding their deposits overnight and launched a new ultra-cheap, four-year loan programme. [ID:ID:nL6N0QC342]
Markets will be looking at how ECB President Mario Draghi characterises the present state of the economy, given the risks to Germany's economy are rising and the effect of Russian sanctions and geopolitical risk may have lowered the ECB's outlook.
"An acknowledgement may be enough to send EUR lower, but the bigger risk is if they see these factors as only minimal or temporary. That may have a bigger positive impact on EUR; probably short-lived," said Emma Lawson, senior currency strategist at National Australia Bank in Sydney. (Editing by Eric Meijer, Simon Cameron-Moore & Shri Navaratnam)