* Yen gains, seen testing Japan's willingness to intervene
* Dwindling U.S.-Japan yield gap seen hurting dollar
* Euro hits record low against Swiss franc on risk aversion
* Collapse of NZ finance firm sparks carry trade unwinding
By Anirban Nag
LONDON, Aug 31 (Reuters) - The yen nudged back towards a 15-year high against the dollar on Tuesday as investors shrugged off the Bank of Japan's latest policy easing, betting instead on more yen gains that would test official readiness to intervene.
With mounting U.S. economic worries likely to keep investors away from riskier assets such as stocks and high-yielding currencies, the market is likely to push up the low-yielding yen. That could eventually prompt Japan to sell its currency in the markets for the first time in more than six years.
"Japan's ministry of finance is sending signals that it is willing to intervene but clearly people remember its struggle with intervention a few years ago," said Simon Derrick, head of currency research at Bank of New York Mellon.
"If they don't intervene when the yen is at 84, when will they do it? Once it goes to all-time lows? I think their resolve ... will be tested."
Japanese Finance Minister Yoshihiko Noda repeated on Tuesday that the government would take decisive action on currencies -- usually seen as code for intervention -- when necessary. But the reaction in the market was limited.
On Monday, the BOJ boosted a cheap loan scheme to banks, in a move that was probably the least it could do for now.
But traders said the policy response to the yen's strength has been insufficient given the current sentiment and lack of appetite for a co-ordinated policy response from other G8 nations, who are grappling with their own problems.
The dollar was down 0.4 percent at 84.27 yen JPY=, not far from its 15-year low of 83.58 hit last week. The greenback has fallen over 2.5 percent against the Japanese currency this month after sliding 2.2 percent in July.
The euro also fell 0.2 percent against the yen to 106.91 yen EURJPY=R, off a nine-year low of 105.44 yen hit last week.
Traders say Japanese authorities are expected to buy the dollar against the yen to curb the yen's strength if the dollar slides 3-4 yen in one day. For Q+A on will Japan intervene to curb the yen's rise, click on [ID:nTOE67U05E].
"There is a tug-of-war that is taking place between Japan's Ministry of Finance and the BOJ and the markets are aware of that," said a currency strategist at a Japanese bank in London. "Even if they decide to intervene, the dollar's topside will be capped with option strikes at 86-87 yen levels."
Analysts said a raft of U.S. economic data due this week could also push the yen higher. On top of closely watched jobs numbers on Friday, there is housing price data on Tuesday and manufacturing data on Wednesday.
Minutes from the Federal Reserve's last board meeting will be released on Tuesday and investors will get further insight into divisions within the Federal Open Market Committee and its August 10 decision to buy longer-term Treasury securities. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ PDF on Japan's yen dilemma: r.reuters.com/nef47n Insider segment on the yen and Japanese growth with
RBS Securities Chief Japan Economist Junko Nishioka:
CARRY TRADE UNWINDING
The dollar/yen rate has had a strong correlation in recent months with the yield gap between the United States and Japan. So a fall in Treasury yields also weighed on the dollar.
In addition, the yen could face potential buyback pressure in cross trades such as euro/yen and Aussie/yen, which have attracted some interest because of their larger yield differentials.
Derrick at Bank of New York Mellon said the collapse of one of New Zealand's largest finance companies was leading to some carry trade unwinding and was hurting high-yielding currencies like the Australian dollar against the yen. [ID:nSGE67U06A].
"Many stop-losses for Japanese margin traders are expected to be triggered when the Australian dollar falls below 75 yen," said a trader at a Japanese brokerage in Tokyo.
In another sign of investor risk aversion, the euro slumped to a record low against the safe-haven Swiss franc, removing barriers at 1.2900 on the way lower. The euro fell as low as 1.2898 francs EURCHF=R on trading platform EBS.
Against the dollar, the euro was marginally higher at $1.2682 EUR=, helped in part by strong job numbers from Germany. [ID:nLDE67U0IQ]. The dollar also fell to a seven-month low of 1.0173 francs CHF=. (Editing by Ruth Pitchford)