* Upward revision to PMI data lifts euro to session high * Investors still wary of ECB, Italian political situation * Yen strengthens after BOJ confirmation hearings By Nia Williams LONDON, March 5 (Reuters) - The euro rose versus the dollar on Tuesday, helped by slightly better-than-expected euro zone data and some investors paring back bets of a European Central Bank rate cut this week. Gains were expected to be limited however, with investors still wary of weak data that could lead to looser monetary policy from the central bank in coming months, and the risk of turmoil in Italy as politicians struggle to form a government. The euro climbed 0.4 percent to a session high of $1.30755 after a euro zone composite PMI survey came in at 47.9, slightly better than the preliminary reading of 47.3. However, the index remained well below the 50 mark dividing growth from contraction in activity and dipped from the previous month. Strategists said many market players felt the euro's fall on Friday to a near three-month low of $1.2966 was overdone, and these levels offered a good buying opportunity. Technical charts showed resistance at the 100-day moving average at $1.3127. "Investors are awaiting the ECB but not necessarily looking for a very negative euro outcome. The inconclusive outcome from the Italian elections did not produce the sell-off some were hoping for, those who were eager to put on fresh shorts last week are now taking those back it seems," said Valentin Marinov, head of European G10 FX strategy at Citi. "But even if the ECB does not surprise already dovish expectations, we still have the risk of further deterioration in data bringing forward bets of further cuts as soon as April." Marinov said investor uncertainty about Italy could escalate if there is no government in place before the end of the month, adding he expected the euro to target $1.28. YEN STRENGTHENS The yen rose against the dollar and euro after confirmation hearings of the government's nominees for two Bank of Japan deputy governor posts, which had been widely expected by the market. The Japanese government has signalled it wants the BOJ to pursue aggressive monetary easing to stimulate the economy, a stance that has weighed heavily on the yen since November. The dollar fell 0.5 percent to 93.04 yen, pulling away from a high of 94.77 yen struck on Feb. 25, which was the dollar's highest level against the yen since May 2010. Jesper Bargmann, Asia head of G11 spot FX for RBS in Singapore, said the dollar's drop against the yen was mostly a reflection of market positioning as traders were probably long dollar/yen going into Tuesday's confirmation hearings. "I think what's happening is a little bit of buying the rumour, selling the fact," Bargmann said. "So when we see the headlines come out, everyone is already expecting more, even though there's very little more they can actually say. The rhetoric has been quite aggressive. But now we need to see some action," he added. The dollar extended losses after opposition Democratic Party lawmaker Keisuke Tsumura said he could not support Kikuo Iwata, one of the government's nominees and an advocate of aggressive monetary easing, because Iwata wants to revise the law governing the central bank's independence. Traders, however, said Iwata could still win parliamentary approval even if the Democratic Party of Japan (DPJ) were to oppose him, as long as other opposition parties joined the ruling Liberal Democratic Party (LDP) to approve his nomination. The euro dipped 0.2 percent to 121.53 yen. The Australian dollar rose 0.4 percent to $1.0237, getting a lift after the Reserve Bank of Australia (RBA) kept interest rates unchanged at a record low of 3.0 percent, as expected.