FOREX-Yen edges up vs dollar as Japan officials dismiss tax cut talk
* Dollar/yen falls after talk corporate tax may not be cut
Fed tapering uncertainty weighs on dollar
* Euro helped by signs of growth in Europe
By Anooja Debnath
LONDON, Aug 15 (Reuters) - The yen firmed against a broadly weaker dollar on Thursday after Japanese officials dismissed a media report that Tokyo is considering cuts in corporate tax.
A lack of clarity on when the Federal Reserve might start trimming its stimulus also weighed on the dollar while the euro drew support from signs of growth in the currency bloc.
The dollar was down 0.1 percent at 97.85 yen, off a low of 97.58 yen. Resistance was cited at the 55-day moving average of 98.42 yen.
Japan's chief government spokesman Yoshihide Suga and Finance Minister Taro Aso played down a story in the Nikkei business daily earlier this week that the government was considering cutting the corporate tax rate.
Japanese stocks fell, pushing the yen higher. The yen has recently held an inverse correlation to Tokyo shares.
"It's been very choppy. The Nikkei was lower after the suggestion of corporate tax cuts was knocked on the head and so dollar/yen has tracked lower too," said Daragh Maher, FX strategist at HSBC.
The yen has faltered against the dollar lately on expectations Japan will take fresh steps to end deflation. Aso's comments that corporate tax cuts would not have an immediate impact was seen as a blow to that view.
Losses against the yen dragged on the dollar index. It was last down 0.1 percent at 81.509.
The dollar's fortunes have been tied to when the Federal Reserve would "taper" stimulus and the uncertainty saw it slide more than 4 percent between July 9 and Aug. 8.
James Bullard, president of the St. Louis Fed, said late on Wednesday he had not made up his mind if next month's policy meeting would be too soon to start curbing bond buying, as he was aware of the risks of being too aggressive.
"The market is getting nervous about tapering. I expect that to happen in September and the dollar to start rising then," said Hideki Amikura, forex manager at Nomura Trust and Banking.
"But it is likely to go through some adjustment before that as there's concerns that tapering could spark risk-off trading."
One sticking point for policymakers is the level of U.S. inflation, which is below the Fed's target. That will heighten the importance of consumer price data due later on Thursday.
Increases above the forecast 0.2 percent would add to the case for trimming stimulus and support the dollar.
Meanwhile, the euro zone's emergence from recession, confirmed on Wednesday, has narrowed the yield differential which has favoured the dollar over the single currency due to expectations the Fed was moving away from its easy policy.
The 10-year yield premium offered by U.S. debt stood at 89 basis points, down from more than 100 in July. The euro rose 0.2 percent at $1.3288.