* Dollar reverses early gains to trade down 0.3 pct vs yen
* Investors look to U.S. GDP, jobs data after strong ISM
* Euro retreats from five-year high vs yen
LONDON, Dec 3 (Reuters) - The yen recovered from early losses to trade higher against the dollar and euro on Tuesday, as investors took profits from a month-long rally and global equity markets declined, driving demand for the safe-haven currency.
The dollar was down 0.3 percent against the yen at 102.65 yen after reaching 103.38 yen in Asian trading. That was close to its 2013 high of 103.74 yen, a level dollar bulls have been targeting.
Trading volumes of dollar/yen were almost double the average over the past month, according to data from the Reuters dealing platform. The dollar is up 18 percent against the yen this year and rose strongly over the past month, on expectations the U.S. would soon scale back its bond-buying programme while Japanese monetary policy remained loose.
After a strong U.S. ISM factory report on Monday, investors are now looking ahead to GDP data on Thursday and, in particular, non-farm payrolls numbers on Friday for further signs of when the Fed will act.
"The momentum is still for dollar/yen to move higher," said Lee Hardman, currency economist at BTMU. "But there are certainly signs that short positioning is becoming more stretched at current levels, while our short-term valuation model is signalling the yen is becoming more undervalued."
The yen has been under pressure for weeks, as the BOJ's commitment to easy policy made it the best funding currency for investing in higher-yielding assets - so-called carry trades.
Net yen short positions were at their highest since July 2007, according to data from a U.S. financial watchdog.
"The key is the payrolls report on Friday," BTMU's Hardman said. "If it's another strong report, then it could push dollar/yen higher."
The MSCI World Equity index was down 0.2 percent and European shares were 1 percent off. Investors have been tending to buy the yen when their appetite for risk fades.
Nikkei futures, which are strongly correlated with the dollar/yen pair, were down 1.2 percent, broadly helping the yen.
The euro retreated from a five-year high of 140.03 yen to 139.33 yen, a slight loss. But it rose 0.3 percent to $1.3575 on investor confidence the European Central Bank would leave interest rates unchanged this week after above-forecast inflation data last Friday.
"Status quo on ECB monetary policy should persist until the end of the year, with no negative rates in sight," said Francesco Scotto, portfolio manager at RTFX Fund Management. "Euro/dollar is still on a bullish trend and should maintain this tone until the end of the month."
The Australian dollar was up 0.3 percent at $0.9124 after data showed solid net exports in July-September as well as firm retail sales in October.
Earlier, the Reserve Bank of Australia reiterated after a policy meeting that the Aussie was still uncomfortably high.