GLOBAL MARKETS-Stock buyers hesitant; euro holds gains
* European shares steady after near 7 pct rise in 2 weeks
* Euro at 7-week high as disappointing data saps dollar
* China's central bank stirs anxiety
* BoE, Fed meeting minutes awaited
LONDON, Feb 19 (Reuters) - Hesistant share investors kept a wary eye on interest rates in China while the euro left the dollar in its wake on Wednesday after soft U.S. economic data argued against any rapid withdrawal of Federal Reserve stimulus.
The action was light, with European shares barely budging in early trading after a month when the region's stocks have dropped seven percent and then climbed back up again.
In the currency market, the euro was holding on to broad-based gains at $1.3755, having stretched as far as $1.3769 overnight, its highest in seven weeks and breaching a key resistance barrier at $1.3740.
It was also firm at 140.52 yen, while the dollar eased back to 102.14 yen and sterling regained some of the ground it had conceded on Tuesday awaiting the publication of minutes from the Bank of England's last meeting.
"The euro strength over the last few days has been more of a process of elimination rather than fundamental euro area strength," said Alvin Tan, an FX strategist at Societe Generale in London.
"The U.S. data has been weak over the last couple of weeks and the UK inflation number yesterday helped kick euro-sterling higher."
Dealers have been surprised by the euro's resilience given speculation the European Central Bank would have to ease policy further to avert the risk of deflation.
But with the euro zone economy sustaining signs of a slow pick-up, wagers on a move next month have been cut.
"One could expect that if the real economy is getting up and if we see that in Germany wage increases are quite substantial, there might be a certain self-correcting trend (in inflation)," ECB member Ewald Nowotny told Reuters in an interview.
"So we will see whether this needs some specific action or whether ... there would be a merit for waiting."
In Asia, Japan's Nikkei pared its early losses to end off 0.5 percent, battling to maintain the momentum of Tuesday's 3 percent rally which followed a decision by the Bank of Japan to expand a scheme to encourage more bank lending.
Seoul lost 0.4 percent, but Sydney edged higher on solid earnings results, while emerging markets focused on unrest in both Ukraine and Thailand.
Dealers had also kept a careful eye on China's central bank after it drained funds from the money market on Tuesday, though it took no new action on Wednesday which helped the Shanghai market bounce by 1.1 percent.
The People's Bank of China (PBOC) is trying to engineer a gradual upward shift in the cost of money to encourage companies to deleverage and discourage high-risk shadow banking activity.
Investors are anxious in case the tightening goes too far and hurts economic growth, concerns that have periodically put pressure on currencies and shares across the Asian region.
Wall Street was expected to see another subdued day later with futures prices pointing to 0.1 percent dips for both the S&P 500 and the Dow Jones Industrial indexes.
Weaker-than-expected data on New York manufacturing and U.S. housing on Tuesday added to the case for the Federal Reserve to be patient in reducing its bond-buying and pushed Treasury yields lower, so undermining the dollar's interest rate advantage.
Yields on the benchmark 10-year U.S. Treasury note eased a few basis points to 2.70 percent in Europe with benchmark German Bunds mirroring the move.
Later on Wednesday, the Fed will release minutes of its January policy meeting when it decided to trim its monthly asset buying by another $10 billion.
Fed Chair Janet Yellen has since indicated that the central bank was still inclined to keep tapering, though markets assume the run of soft data will encourage patience in its efforts.
Figures from the U.S. Treasury on Tuesday hinted at one possible reason for the euro's performance in the FX market - an outflow of almost $120 billion from U.S. assets in December.
In contrast, the euro zone attracted inflows into stocks of 111 billion euros. At the same time, the euro zone enjoyed a record current account surplus of 216 billion euros in 2013, while the United States ran up a deficit of almost $400 billion.
In commodity markets, gold slipped to $1,320.85 an ounce after running into selling at a 3-1/2-month peak of $1,331.10.
U.S. crude rose to a fresh four-month high on forecasts of lower crude and oil products stockpiles due to new pipeline capacity and robust winter demand.
Nymex crude futures were 20 cents higher at $102.63, having jumped 2.4 percent on Tuesday, while Brent crude edged down 37 cents to $110.09 a barrel.