* Aussie, NZ dollars near Aug highs before RBA decision
* Yen holds near 7-wk high vs dollar, steady on crosses
* Official Chinese PMI gives cross/yen brief lift
By Charlotte Cooper
TOKYO, Sept 1 (Reuters) - The yen held near a seven-week peak on the dollar on Tuesday, while higher-yielding currencies such as the Australian and New Zealand dollars were strong ahead of a rate decision in Australia.
The Reserve Bank of Australia's (RBA) monetary policy board meets amid mounting speculation it may shift to a tightening bias even as it keeps rates at a record low of 3 percent.
The policy decision will be announced at 0430 GMT and a move towards a tightening bias could give a boost to the Aussie and the kiwi, which were hovering just below recent 11-month highs against the greenback.
But analysts said if the RBA disappointed markets by not indicating a tightening bias, there was a risk the Aussie could be sold off.
"With the market pricing in an aggressive normalisation process, the risk to Aussie seems tilted to the downside if the RBA simply repeats its neutral stance without an indication that the next move in rates will be higher," said Matthew Strauss, senior currency strategist at RBC Capital.
The Australian dollar was steady on the day at $0.8436, just below last month's 11-month peak at $0.8479, while the New Zealand dollar was up 0.3 percent at $0.6872 and near last month's peak close to $0.6900.
Financial markets are pricing in nearly 200 basis points of rate hikes in the next 12 months. Rate hike chances have increased in the past week after upbeat data.
UBS analysts said they expected a move in the second quarter of next year but there was a high chance of an increase before the end of December.
"Such a step would have major consequences for currency markets as carry traders may choose to return in earnest," they wrote in a research note.
"But the RBA is probably aware of this scenario and the unwelcome tightening effects of a stronger currency and could choose to voice balanced risks in the short term."
The yen was at 93.11 per dollar, unchanged from late New York levels but below Monday's seven-week high of 92.54 set on trading platform EBS.
Its rise on Monday came in the wake of a victory by Japan's opposition Democratic Party in elections at the weekend, which helped push it through chart levels and triggered stop losses.
Foreign investors turned net buyers of Japanese equities in April and buying accelerated in mid-July and the first two weeks of August, totalling 1.37 trillion yen in that period, before turning negative in the third week.
Tohru Sasaki, chief FX strategist for Japan at JP Morgan, said Japanese investors wanted to see whether foreigners would take the change in government as positive.
"People are worrying about dollar/yen and the most popular topic is if foreign investors' Japanese stock purchases continue or not," Sasaki said.
The yen's gains on Monday were also helped by a fall in the volatile Shanghai share market which prompted investors to reduce exposure to currencies viewed as more risky.
Shares around the region were mostly positive on Tuesday and data from China showed activity in the manufacturing sector in expansion mode for the six month in a row, giving a slight lift to commodity-related currencies against the yen.
The Aussie rose 0.2 percent on the day to 78.49 yen, while the New Zealand dollar gained 0.4 percent to 63.88 yen.
The euro was barely changed on the day at 133.36 yen and $1.4334. (Additional reporting by Anirban Nag in Sydney; Editing by Joseph Radford)