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* Carney tells Sunday Times UK rates may rise before pay recovers
* Sterling outperforms, others subdued as Jackson Hole looms
By Ian Chua
SYDNEY, Aug 18 (Reuters) - Sterling rose on Monday after the Bank of England indicated that UK interest rates may have to rise even before wage growth recovers, backtracking from earlier comments that prompted markets to push out the risk of a rate hike.
Sterling rose as high as $1.6739, from around $1.6689 late in New York on Friday. It also firmed against the euro, which dipped below 80.00 pence from around 80.23.
Just last week, the pound plumbed a four-month trough of $1.6657 after the BOE slashed its forecast for wage growth and stressed that any interest rate hike would depend largely on an improved outlook for pay.
But in an interview with the Sunday Times, Governor Mark Carney said he would not have to wait for real wages to turn positive before raising rates.
Carney, however, has wrong-footed markets before and sterling bulls appeared to be taking his latest comments with a pinch of salt.
The other major currencies were biding their time ahead of more guidance later in the week from a gathering of top central bankers at the Federal Reserve's annual Jackson Hole symposium starting on Aug. 21.
This year's focus is on "re-evaluating labor market dynamics".
"Historically, trading leading into Jackson Hole sees increased volatility," noted Evan Lucas, strategist at IG in Melbourne.
"Talk so far is that chairperson Yellen is concentrating on employment and the composition of wage growth and full-time versus part time percentages; this issue is likely to be echoed by central bankers around the world as global employment remains soft at best."
The U.S. dollar, euro and yen were little changed from where they were late in New York on Friday, where heightened tensions in Ukraine drove global bond yields to fresh lows.
The euro last traded at $1.3389, well within a slim $1.3333-$1.3445 range seen so far this month. Against the yen, the common currency was flat at 136.11.
The greenback bought 102.39 yen, roughly in the middle of this month's 101.51-103.05 range.
The Australian dollar traded at $0.9317, having slowly recovered from a dip to $0.9239 earlier in the month.
The key event this week for Aussie bulls is Reserve Bank of Australia Governor Glenn Stevens' twice-yearly parliamentary testimony on Wednesday.
Traders, however, expect no fireworks from Stevens, who is likely to reaffirm the central bank's steady policy outlook.
On the data front, surveys on manufacturing activity in China and Europe as well as UK inflation and retail sales will be closely watched this week. (Editing by Shri Navaratnam)