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Aussie & NZ dollars pare losses, still on defensive

WELLINGTON/SYDNEY, Oct 9 (Reuters) - The Australian and New Zealand dollars pared some of their recent losses on Tuesday as investors took profits on short positions built against the euro and sterling, though the mood was still defensive overall.

* Aussie around $1.0191, after short covering lifted it to an overnight high of $1.0220 from $1.0165 in late trade on Monday.

* Aussie still looking vulnerable, with major support found at $1.0150, an Oct 8 low, while resistance at 100-DMA $1.0246.

* It has fallen around 2 pct so far this month vs its U.S. counterpart and 3 pct against the euro, weighed by a rate cut by the Reserve Bank of Australia (RBA) last week and the prospect of more easing on a cloudy Chinese outlook.

* Interbank futures pricing shows a 64 pct chance of another quarter of a point cut next month with OIS markets

showing nearly 100 bps worth of easing over the next 12 months.

* In focus will be a speech by RBA Deputy Governor Philip Lowe at 0140 GMT on "The Labour Market, Structural Change and Recent Economic Developments".

* It could address the unusually sharp drop in the participation rate seen in the last year which has helped keep unemployment low at 5.1 pct even though jobs growth has been very sluggish.

* NZ dollar at $0.8194 early from $0.8174 on Monday, having hit a one-month low of $0.8150 overnight.

* Kiwi, which is down 1.2 pct this month, helped by cross buying, with sellers seen lined around 10-DMA at $0.8237 and support at Sept 10's high of $0.8134, then $0.8100.

* Risk sentiment weighed after European equities fell 1.4 pct. U.S. stocks also slip, albeit in quiet trading, ahead of Alcoa results.

* Euro off two-week highs against the dollar and yen after euro zone ministers said Spain did not yet need a bailout. The Thomson Reuters-Jefferies CRB index was down 0.5 pct, while U.S. bond market shut for Columbus Day.

* The World Bank cut its economic growth forecasts for the East Asia and Pacific region on Monday and said there was a risk the slowdown in China could worsen and last longer than many analysts have forecast.

* Yet the return of Chinese markets from a holiday saw spot iron ore prices rise 6 pct to $110.40 , a positive for Australia as the steel-making mineral is its biggest export earner.

* Aussie/kiwi keeps to recent range, last around $1.2440, not far from a one year low of NZ$1.2361 hit last week.

* Euro pulls back to A$1.2712 and NZ$1.5830

respectively.

* The Antipodeans lower against the yen, with the Aussie last at 79.96 yen AUDJPY=R>, having slipped to an overnight low of 79.34 yen, lowest since June 28. Kiwi hit a three-week low of 63.49 yen , but bounces back to 64.20 yen early.

* NZ expects a quarterly survey of business confidence

and partial retail sales indicator in the morning.

* NZ government bonds start firmer, with yields around 4 basis point lower along the curve.

* Australian government bond futures higher with three-year contract up 0.020 points at 97.660, and the 10-year contract 0.030 points at 97.055.

((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 802 7980))

Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX