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(Correct second bullet to say dollar hits highs versus yen, not versus dollar)
* Dollar steady after G7 backs Japan's easing efforts
* Dollar hits 4-1/2-year highs versus yen
* Oil, gold prices fall on dollar's strength
* U.S., European stocks retreat from recent highs
By Richard Leong
NEW YORK, May 13 (Reuters) - The dollar rose against the yen and held steady against most major currencies on Monday, hurting oil and gold prices, after the Group of Seven backed Japan's efforts to spur growth through aggressive asset purchases.
A surprise rise in U.S. retail sales in April, when Americans bought cars, home improvement materials and a range of other goods, also supported the view of resilience in the world's biggest economy, supporting the dollar's recent strength.
U.S. stocks fell on mild profit-taking following a stellar run to record highs, while weakness in the top European banking sector knocked the region's share prices lower.
"The value of the dollar has weighed on the prices of all commodities, specially the more sensitive ones such as oil and gold," said Harry Tchilinguririan, head of commodity market strategy at BNP Paribas.
The dollar, which has risen 5 percent against a basket of major currencies since February, and double that versus the yen, looked unlikely to buckle after officials at a G7 meeting in Britain over the weekend showed little concern about the yen's slump.
The greenback hit a 4-1/2 year high of 102.14 yen in Asian trading, but it faded a bit to 101.72 yen, down 0.1 percent following the U.S. retail sales numbers. The dollar was up 0.2 percent at $1.2990 against the euro.
"Yen selling will have been encouraged by the outcome from the G7 meeting, where officials reiterated that they will tolerate yen weakness as long as it results from the use of domestic instruments to stimulate the Japanese economy," said Bank of Toyko-Mitsubishi currency analyst Lee Hardman.
A stronger dollar makes dollar-denominated commodities such as oil more expensive for many countries. Brent oil prices slipped back below $103 a barrel with ample supply weighing on sentiment as well.
Weaker-than-expected industrial output data from China also helped push oil prices lower. London copper, however, climbed 0.09 percent to $7,382 a tonne, as the data raised hopes that monetary authorities in the world's biggest metals consumer may embark on further easing to underpin demand.
China's annual industrial output grew 9.3 percent in April, up from a seven-month low of 8.9 percent in March but still missing market expectations for a 9.5 percent expansion.
Spot gold, often bought as an alternative safe-haven to the dollar, fell 1.1 percent to 1,431.66 an ounce.
Standard & Poor's 500 index closed at a record high on Friday, while European shares started the week at five-year highs.
These lofty levels gave investors a reason to cash in some gains as worries about another spring "swoon" persisted.
Shortly after the open, the Dow Jones industrial average was down 35.54 points, or 0.24 percent, at 15,082.95. The Standard & Poor's 500 Index was down 2.32 points, or 0.14 percent, at 1,631.38. The Nasdaq Composite Index was down 1.58 points, or 0.05 percent, at 3,435.01.
Europe's blue chip stocks on the FTSEurofirst 300 index were 0.26 percent lower at 1,230.26, dragging the MSCI global index down 0.1 percent at 373.84.
In the bond market, benchmark 10-year Treasury notes fell 6/32 in price to yield 1.9208 percent - just below a six-week high in yield they set earlier. But German Bund futures were up 0.1 percent at 144.82.
Italy's three-year debt costs fell to their lowest since January at an auction on Monday as the backstop from the European Central Bank fed demand for bonds of the euro zone's heavily indebted members.
Comments from Italian Ignazio Visco, one of the European Central Bank's top policymakers, suggesting the ECB could cut its deposit rate below zero lifted benchmark German Bund futures from their lowest in more than a month after a sell-off last week on upbeat euro zone and U.S. data.
If the ECB did push its deposit rate into negative territory, banks would effectively be charged for parking any spare cash they do not lend.
Analysts believe that would send investors into other more profitable ultra-safe assets such as Bunds.
"We all agreed in the (ECB Governing) Council that we have to look with care and in that case we may reduce the rate," Visco told CNBC television.
"We think that - and I personally think that, this is effective - the economy now is capable of taking it on board." (Additional reporting by Ron Bousso, Marc Jones in London; Editing by Dan Grebler)