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FOREX-Dollar tumbles, hurt by benign wage inflation, tariff action

* 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

(Updates prices in text, table, adds new analyst comment) NEW YORK, March 12 (Reuters) - The dollar fell on Monday, pressured by data showing persistently low wages that will likely constrain the U.S. 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 amid 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. Aside from the trade debate, key U.S. inflation numbers are potentially set to create more uncertainty for investors with the release on Tuesday of consumer price data and the producer price index due on Wednesday. "Any markedly weaker-than-expected inflation readings this week could lead to a boost for stocks and further pressure on the struggling dollar," said James Chen, head of research at Forex.com in Bedminster, New Jersey. In late trading, the dollar fell 0.4 percent against the yen to 106.37 yen, and was down 0.5 percent at 0.9470 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, rose against the dollar to $1.2335 , pushing the dollar index down 0.2 percent at 89.90 . 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.

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Currency bid prices at 3:40PM (1940 GMT)

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

Session

Euro/Dollar EUR= $1.2333 $1.2305 +0.23% +2.80% +1.2345 +1.2291 Dollar/Yen JPY= 106.3700 106.7700 -0.37% -5.59% +106.9700 +106.3300 Euro/Yen EURJPY= 131.18 131.41 -0.18% -2.96% +131.6900 +130.9800 Dollar/Swiss CHF= 0.9472 0.9510 -0.40% -2.78% +0.9514 +0.9460 Sterling/Dollar GBP= 1.3903 1.3850 +0.38% +2.89% +1.3917 +1.3842 Dollar/Canadian CAD= 1.2834 1.2810 +0.19% +2.04% +1.2841 +1.2804 Australian/Doll AUD= 0.7874 0.7849 +0.32% +0.94% +0.7879 +0.7847

ar

Euro/Swiss EURCHF= 1.1683 1.1705 -0.19% -0.05% +1.1715 +1.1675 Euro/Sterling EURGBP= 0.8871 0.8886 -0.17% -0.14% +0.8896 +0.8850 NZ Dollar/Dolar NZD= 0.7294 0.7280 +0.19% +2.94% +0.7323 +0.7287 Dollar/Norway NOK= 7.7426 7.7751 -0.42% -5.66% +7.7904 +7.7403 Euro/Norway EURNOK= 9.5510 9.5729 -0.23% -3.02% +9.5935 +9.5490 Dollar/Sweden SEK= 8.2401 8.2426 +0.19% +0.47% +8.2670 +8.2221 Euro/Sweden EURSEK= 10.1636 10.1443 +0.19% +3.30% +10.1664 +10.1366

(Reporting by Gertrude Chavez-Dreyfuss Editing by Susan Thomas and Lisa Shumaker)