* Limited reaction seen from ruling bloc loss in Tokyo poll
* Dollar/yen and cross/yen supported by short-covering
* Eyes on equities, outlook for risk appetite
By Masayuki Kitano
TOKYO, July 13 (Reuters) - The dollar and the euro held steady against the yen on Monday, supported by short-covering as investors awaited U.S. corporate earnings results this week to gauge the strength of the global economy.
An election loss for Prime Minister Taro Aso's ruling bloc at a Tokyo assembly poll on Sunday had limited impact on the yen, traders said, adding that the market was focusing more on the health of the global economy.
Traders said a renewed focus on market expectations that Goldman Sachs would post good results when it reports quarterly earnings this week helped spur some short-covering in the yen crosses, and dragged the yen lower at one point.
"The market has been long the yen, and it seems like there is some position unwinding in yen crosses overall," said a trader for a major Japanese bank, adding that the talk about Goldman's results helped trigger the move.
In a story on its website, the New York Times said Goldman Sachs was likely to post huge profits. The paper said analysts predict the bank earned more than $2 billion in the March-June period, helped by its trading across global markets.
Not all traders were convinced that the New York Times story about Goldman Sachs had much impact, and a trader for a European bank said the contents of the article were not particularly new.
Analysts polled by Thomson Reuters are expecting Goldman to report net income for common shareholders of $3.54 a share, which would exceed a surprisingly strong first quarter in which Goldman reported net income of $3.39 per share.
The dollar edged up 0.1 percent to 92.63 yen, after rising to as high as 92.95 yen on trading platform EBS earlier in the day, and pulling away from a five-month low of 91.77 yen struck on Friday.
The euro edged up 0.1 percent to 129.20 yen, having risen as high as 129.89 yen earlier. The euro fell to 127.00 yen last week, its lowest in nearly two months.
The dollar and yen crosses gained support when U.S. S&P 500 stock futures and Tokyo shares edged higher earlier on Monday, but later trimmed their gains as equities turned negative, traders said.
One trader said the euro edged up against the yen at one point due to short-covering by an Asia-based fund.
Against the dollar, the euro rose 0.1 percent to $1.3950.
RISK APPETITE
"The theme is likely to continue to be whether risk can be taken or not," said Minoru Shioiri, chief manager for FX trading at Mitsubishi UFJ Securities, adding that forthcoming U.S. corporate earnings were a focal point.
The dollar and yen have fallen broadly since March, as hopes grew that the worst of the global economic recession was over, boosting risk appetite and prompting investors to shift funds out of the safe-haven dollar and low-yielding yen into other currencies and assets.
But in recent weeks, market players have started to fret that optimism about the global economy's recovery prospects and the rally in risk assets may have been overdone, giving a boost to the yen and the dollar, and dragging down currencies such as the euro and the Australian dollar.
Latest U.S. Commodity Futures Trading Commission data shows that speculators on the Chicago Mercantile Exchange's International Monetary Market have flipped to net long positions in the yen, to the tune of 17,117 contracts in the week to July 7, after having been slightly short the yen the prior week.
Traders and analysts played down the impact from the weekend Tokyo assembly election.
Japanese Prime Minister Taro Aso's ruling bloc was soundly defeated in the Tokyo election seen as a bellwether for a national poll to be held within three months. The election results suggest the main opposition Democratic Party will win more seats in a general election that must be held by October at the latest, said Tohru Sasaki, chief foreign exchange strategist for JPMorgan Chase Bank in Tokyo.
But it is unclear how that would affect Japan's economy, and the impact on the foreign exchange market seems likely to be limited at this point, Sasaki said, adding that the market's focus was on global economic conditions. (Additional reporting by Yoshiko Mori; Editing by Hugh Lawson)