* Weak U.S. service sector, labour data weigh on greenback
* Yen helped by Japanese media report on BOJ policy options
TOKYO, Sept 7 The yen gained on Wednesday after
downbeat U.S. economic data made a U.S. interest rate increase
this month unlikely, prompting investors to trim their dollar
bets and triggering stop-loss orders in early Asian trade.
The dollar was down 0.5 percent at 101.50 yen after
dipping as low as 101.245 earlier, its lowest since Aug. 26 and
well below last Friday's high of 104.32 yen. It tumbled more
than 1 percent against its Japanese counterpart on Tuesday.
The Institute for Supply Management's non-manufacturing
purchasing managers' index fell to 51.4 last month, far short of
economists' expectations and the largest one-month drop since
November 2008, giving the U.S. Federal Reserve reason to delay
increasing interest rates.
The Federal Reserve's labour-market conditions index also
fell in August, slipping back into negative territory after a
positive reading in July.
Also bolstering the yen was the Sankei newspaper's report
saying Bank of Japan policymakers were divided ahead of the
central bank's Sept. 20-21 meeting, at which BOJ Governor
Haruhiko Kuroda has said the board will conduct a comprehensive
assessment of its massive stimulus programme.
"BOJ policy members are divided between those who support
negative interest rates, prioritising government bond purchases,
and others who oppose additional easing measures," said Shinichi
Kashiwagi, head of market sales for Japan at National Australia
Bank in Tokyo, noting the paper's report.
The BOJ will refrain from accelerating money printing or
deepening negative rates this month as improvements in the
economy make it hard to justify again deploying "bazooka"-like
big stimulus, Kazuo Momma, who oversaw the bank's monetary
policy drafting and global affairs until May, told Reuters on
The euro skidded 0.6 percent to 114.20 yen but was
steady on the day against the dollar at $1.1250.
The dollar index, which tracks the greenback against a
basket of six major rivals, edged down to 94.783, not far
from its overnight low of 94.767, its deepest nadir since Aug.
The Australian dollar edged down 0.1 percent to
$0.7681 after rising more than 1 percent on Tuesday after the
Reserve Bank of Australia held interest rates steady at 1.5
(Reporting by Lisa Twaronite; Editing by Eric Meijer)