* Aussie pares losses, holds above earlier session lows
* China Q1 GDP +7.4 pct y/y, a tad better than expected
* Dollar/yen buoyed by Nikkei’s surge, stops add to gains
* Tokyo shares extend gains on Japan finmin comments on GPIF (Updates prices, adds comments)
By Masayuki Kitano
SINGAPORE, April 16 (Reuters) - The Australian dollar pared losses on Wednesday after China’s first-quarter economic growth slightly exceeded expectations and helped underpin risk sentiment.
The safe-haven yen slipped as Tokyo shares extended gains following vague comments from Japanese Finance Minister Taro Aso on the country’s $1.26 trillion government pension fund, which traders took to mean that it could step up its stock buying.
Commodity currencies had been weak going into the Chinese data on caution ahead of the figures and news that Ukraine had launched military operations against separatists. The New Zealand dollar was hit further by surprisingly soft inflation data at home.
The Aussie later gained some support after Chinese gross domestic product data showed that the economy grew 7.4 percent in the January-March quarter from a year earlier.
While that was China’s slowest pace of growth in 18 months and a slowdown from 7.7 percent growth in the final quarter of 2013, it was slightly stronger than the median forecast of 7.3 percent in a Reuters poll.
“It was better than expected ... so I think there is a sense of relief for now,” said Teppei Ino, a Singapore-based analyst for Bank of Tokyo-Mitsubishi UFJ.
The Australian dollar was last steady on the day at $0.9363 , holding above a session low of $0.9333 set earlier in the day, well before the release of the Chinese GDP data.
The New Zealand dollar, however, remained under pressure after data showed that New Zealand’s annual inflation rate slowed to 1.5 percent, prompting markets to pare back expectations of aggressive interest rate hikes for this year.
The kiwi was last down 0.6 percent at $0.8594.
The overall reaction to the Chinese GDP data was relatively subdued.
While the yen edged lower after the release of the data, market participants said the Japanese currency mostly took its cues from a surge in Tokyo equities.
Japan’s benchmark Nikkei share average was last up 2.4 percent, having extended gains after Aso said Government Pension Investment Fund (GPIF) “moves” will become apparent in the stock market from June onwards.
Such gains in Tokyo shares can help bolster risk appetite and weigh on the safe-haven yen.
The dollar rose 0.2 percent to 102.16 yen, inching away from a three-week low of 101.32 yen set last Friday.
“A lot of stops went through on a break of 102.00, and with the Nikkei doing so well, it’s dragging dollar/yen higher,” said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore, referring to stop-loss buying in the dollar versus the yen.
With the yen faltering, the euro rose 0.3 percent versus the Japanese currency to about 141.17 yen.
Against the dollar, the euro held steady at $1.3818.
Traders said investors were waiting for a speech by Fed Chair Janet Yellen, who is due to speak on monetary policy and the economic recovery before the Economic Club of New York later on Wednesday. (Additional reporting by Ian Chua in Sydney; Editing by Chris Gallagher)