FOREX-Dollar sinks as benign wage inflation, tariff action weigh

* Dollar on the defensive against most currencies

* Euro outlook uncertain, still hurt by ECB meeting

* Yen gains after suspected Japan cronyism scandal

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

(Recasts, updates price, adds table, changes byline, dateline; previous LONDON) NEW YORK, March 12 (Reuters) - The dollar fell against most currencies on Monday, pressured by data showing persistently low wages that will likely constrain the Federal Reserve from raising interest rates more than three times this year. Friday's non-farm payrolls report showed U.S. job gains for February were much higher than expected, but wage inflation, a closely-watched indicator by the Fed, remained subdued. "Mixed messages on America's labor market last week largely offset and, importantly, failed to move the dial in favor of faster rate hikes from the Fed," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "To excite the dollar and move the needle for the Fed to raise rates at a quicker pace, wage growth would need to move above 3 percent," he added. Average hourly earnings edged up four cents, or 0.1 percent, to $26.75 in February, a slowdown from the 0.3 percent rise in January. That lowered the year-on-year increase in average hourly earnings to 2.6 percent from 2.8 percent in January. The dollar also struggled as a result of uncertainty about U.S. trade protectionism, analysts said, after President Donald Trump imposed tariffs on steel and aluminum imports, except those from Mexico and Canada. "We remain cautious on the outlook for the U.S. dollar and reiterate that tariff action even on a limited scale has not reflected positively on the dollar overall in the past," said Shaun Osborne, chief currency strategist at Scotiabank in Toronto. "Generally speaking, we think that protectionist regimes do not necessarily support a strong domestic currency either." In mid-morning trading, the dollar fell 0.3 percent against the yen to 106.53 yen, and was down 0.2 percent at 0.9496 franc versus the Swiss currency. The yen, which tends to perform well when markets are anxious, gained as traders eyed a suspected cover-up of a cronyism scandal involving Japanese Prime Minister Shinzo Abe and his close ally, Finance Minister Taro Aso. The euro, meanwhile, inched up against the dollar to $1.2315 , pushing the dollar index down 0.1 percent at 90.0122 . After a strong start to 2018, the euro remains below the three-year peak hit in February of $1.2556. A more-dovish-than-expected central bank meeting last week continued to weigh on the single currency. The euro fell last week as the European Central Bank said inflation expectations remained subdued and that monetary policy would remain "reactive." "The euro is still suffering in the aftermath of the ECB meeting," said Alvin Tan, a currencies analyst at Societe Generale. "The cross currents are affecting the euro."


Currency bid prices at 10:32AM (1432 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change


Euro/Dollar EUR= $1.2311 $1.2305 +0.05% +2.63% +1.2341 +1.2291 Dollar/Yen JPY= 106.5100 106.7700 -0.24% -5.47% +106.9700 +106.3700 Euro/Yen EURJPY= 131.11 131.41 -0.23% -3.00% +131.6900 +130.9800 Dollar/Swiss CHF= 0.9491 0.9510 -0.20% -2.59% +0.9514 +0.9486 Sterling/Dollar GBP= 1.3887 1.3850 +0.27% +2.78% +1.3905 +1.3842 Dollar/Canadian CAD= 1.2828 1.2810 +0.14% +2.00% +1.2838 +1.2804 Australian/Doll AUD= 0.7864 0.7849 +0.19% +0.78% +0.7879 +0.7847


Euro/Swiss EURCHF= 1.1683 1.1705 -0.19% -0.05% +1.1715 +1.1677 Euro/Sterling EURGBP= 0.8862 0.8886 -0.27% -0.24% +0.8896 +0.8850 NZ NZD= 0.7289 0.7280 +0.12% +2.86% +0.7323 +0.7289


Dollar/Norway NOK= 7.7583 7.7751 -0.22% -5.47% +7.7904 +7.7496 Euro/Norway EURNOK= 9.5502 9.5729 -0.24% -3.03% +9.5935 +9.5516 Dollar/Sweden SEK= 8.2506 8.2426 +0.13% +0.60% +8.2670 +8.2221 Euro/Sweden EURSEK= 10.1574 10.1443 +0.13% +3.24% +10.1662 +10.1366

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Tommy Wilkes in London Editing by Susan Thomas)