FOREX-Dollar slide pauses,market seeks clues on US rates
* Dollar flat vs basket of currencies
* Dollar up vs yen on short-covering with share rise-trader
* Aussie up after data on consumer confidence jumps
* Investors await more clues to test Fed rate hike view
TOKYO, June 10 (Reuters) - The dollar was steady against a basket of currencies on Wednesday after sliding the previous day when investors questioned whether the economy had improved enough to justify talk of a Federal Reserve rate hike by the year-end.
The dollar rose against the yen as traders cited regional players actively covering short positions with Asian shares extending gains in early afternoon trade. Tokyo's Nikkei average .N225 hit an eight-month high.
But most investors stayed on the sidelines ahead of the release of the Fed's Beige Book of regional economic conditions later in the day, which may offer further clues on U.S. rates.
Wednesday's auction of 10-year U.S. Treasury notes will be closely watched as the sale is seen as a test of confidence in the government's long-term credit-worthiness in light of a burgeoning deficit to finance its stimulus package and financial bailouts, traders said.
A further rise in long-term U.S. yields despite the Fed's buying of Treasuries after the benchmark 10-year yield spiked to seven-month highs earlier this week could add to concerns that ballooning U.S. borrowing could damage the dollar and the government's top AAA credit rating, market players said.
"Moves in U.S. interest rates have been complicating the dollar's direction recently, and the market now wants to see how the 10-year Treasury auction today will go and impact the dollar," said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities.
The dollar index, a gauge of the greenback's performance against six other major currencies, was steady at 79.849 .DXY.
The euro was nearly flat from late New York trade at $1.4069 EUR= after climbing as high as $1.4102 on trading platform EBS the previous day.
The pound was steady at $1.6325 GBP=D4 after jumping as high as $1.6363 on Tuesday as stronger-than-expected UK housing data and fading chances of a government collapse lifted sterling.
"The market is struggling to catch a clear trend in the dollar right now," said Yoshihisa Kanzaki, a trader at Shinkin Central Bank, adding that it was hard to make a big directional bet on the dollar.
The dollar rose 0.2 percent to 97.60 yen JPY=, reversing earlier losses to the day's low of 97.08 yen on selling by Japanese exporters to repatriate overseas earnings. Continued...
