* Dollar gains vs yen on strong U.S. data
* Euro hovers below $1.32 as worries about Greece persists
* Aussie firm ahead of RBA rate decision at 0430 GMT
By Kevin Yao
SINGAPORE, May 4 (Reuters) - The yen sank to a 8-½ month low against the dollar on Tuesday after robust U.S. data raised investor expectations of an interest rate rise this year, while the Bank of Japan is seen trailing behind in policy tightening.
The euro huddled near one-year lows as concerns grew on whether an aid package for Greece will work, while Australian dollar held firm ahead of an expected rise in interest rates.
The dollar gained 0.4 percent to 94.98 yen, the highest level since Aug. 24. It later stabilised near 94.90.
U.S. manufacturing registered its fastest pace of growth in nearly six years in April, while consumer spending, which accounts for over two-thirds of U.S. economic activity, rose in March for a sixth straight month, the Commerce Department reported on Monday.
On the chart, the dollar faces technical resistance near 95.10, which is the 61.8 percent retracement the dollar's decline from 101.5 to 84.70 in 2009.
Traders said the 94.85/95.10 resistance zone was an important hurdle and a break above those levels, should allow for a closer test of the 97/98 yen zone.
The yen was also subdued on the crosses, losing ground against the euro and the Aussie.
The yen's weakness is seen justified by the Bank of Japan is seen keeping rates low indefinitely amid concerns on Japan's fiscal position as its public debts near 200 percent of GDP.
A senior IMF official warned on Monday that Japan may face bond sales problems if it failed to work out a credible medium-term fiscal reform programme.
Last week, the The Bank of Japan said it needed to do more to foster economic growth and renewed its commitment to ultra-loose monetary policy even as it signalled deflation may end sooner than earlier thought.
Robert Rennie, strategist at Westpac, expects the yen's weakness against the dollar to persist this year as Japanese investors have been a massive buyer of foreign assets in recent years.
"With each basis point that foreign rates rise, the cost of holding those hedges rises. I expect to see significant asset hedges being lifted by Japan this year," he said.
EURO STRUGGLES
The euro was at $1.3195, little changed from in New York on Monday when it lost 0.7 percent.
Near term support is seen around its one-year low of $1.3112 and then at $1.3085, the 76.4 percent retracement of its rise from the March 2009 low of $1.2455 to a high of around $1.5140 in Nov, 2009.
Trade is expected to be light with Tokyo shut on Tuesday.
"The euro is heading towards lower lows," said John Horner, currency strategist at Deutsche Bank. "It's a combination of good U.S. data and a general feeling that the political process in the euro zone in trying to solve the Greek crisis is cumbersome that is hurting sentiment."
At the weekend, European finance ministers agreed to a record 110 billion euro ($147 billion) bailout package for Greece.
But currency traders are worried whether Germany would secure parliamentary approval to release the money. Greece needs funds by May 19 to meet a big repayment to creditors..
Also, investors say there were concerns about other indebted euro zone countries such as Portugal and Spain.
Later on Tuesday, the Reserve Bank of Australia is expected to raise its 4.25 percent cash rate for the third straight time this year as the economy rebounds.
The Aussie was steady at $0.9260, but with much of the hike now priced in a lot depends on the wording of the statement. If the RBA leaves the door open for more moves that could support the Aussie.
But Rennie cautioned that the Australian dollar may face some pressure if the RBA failed to give much further commitment.
"I see short term risks back to 0.9150 and see Australian dollar as a buy on dips back to 0.9070," he said. (Editing by Jan Dahinten)