Dollar at three month peak on yen, China data awaited

SYDNEY (Reuters) - The U.S. dollar held near multi-year highs on the yen and euro on Tuesday amid starkly different outlooks for global interest rates, while Asian investors braced for more economic news from China.

The dollar was nearing major chart barriers against the yen, having hit a three-month high at 121.46 yen . A break of 121.84 would take it to territory not visited since July 2007.

A lower yen is viewed as positive for exports and corporate profits, and Nikkei futures implied opening gains of around 100 points for the index <.N225>.

Early share moves were modest with Australian stocks <.AXJO> edging up 0.2 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was flat.

Investors were waiting on Chinese inflation data, where a soft result would underline the scope for easier monetary and fiscal policies, but might also aggravate fears of deflation.

Consumer prices are seen rising 0.8 percent in February, from January, while the annual pace should tick up to 0.9 percent.

China's share markets <.SSEC> bounced on Monday as bank stocks benefited from news the securities regulator was considering issuing brokerage licenses to banks, potentially creating a new revenue stream for the industry.

Wall Street also rallied on Monday, helped by more billion-dollar takeover deals. [.N]

The Dow <.DJI> rose 0.78 percent, while the S&P 500 <.SPX> gained 0.39 percent and the Nasdaq <.IXIC> 0.31 percent. The pan-European FTSEurofirst 300 index <.FTEU3> ended down 0.24 percent.

Speculation the Federal Reserve could start raising interest rates from June kept the dollar <.DXY> well underpinned in currency markets.

The euro was pinned at $1.0838 after failing to recoup almost any of its recent hefty losses that saw it fall to $1.0822, the lowest since September 2003. Bears are now eyeing the next major layer of chart support at $1.0762.

The European Central Bank began its trillion-euro bond buying campaign on Monday, nudging down yields in Germany and other core EU sovereigns. Japan is well under way in its own bond buying program, which is expected to last for at least another year.

Analysts at Barclays estimate ECB asset purchases will outstrip net supply by a factor of 3-to-1, shrinking the outstanding amount of assets by 840 billion euros.

That will force investors to seek higher yields in longer-duration and riskier debt both within the EU and abroad. The resulting outflow of funds could well keep downward pressure on the euro for months to come.

Lingering uncertainty over Greece added to the euro's woes.

Finance experts from Greece will open talks about economic reforms on Wednesday with officials from the European Union, the ECB and the International Monetary Fund.

The ECB's Governing Council is set to hold a teleconference on Thursday to discuss extending emergency liquidity assistance (ELA) for Greek banks.

Commodities continued to struggle with the strength of the U.S. dollar. Brent crude oil fell 2.1 percent on Monday to $58.47 a barrel. U.S crude was quoted 2 cents lower early Tuesday at $49.98 a barrel.

Gold was stuck at $1,167 an ounce and just above a three-month low.

(Editing by Richard Pullin)

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