* Yen falls broadly as charts suggest its rally overdone
* UAE c.bank action seen providing stability, but minimal
* Japan finmin says no intervention for now - report
* But he also notes he never said intervention was impossible
By Satomi Noguchi
TOKYO, Nov 30 (Reuters) - The dollar fell against other major currencies on Monday, retreating from sharp gains made last week, after the United Arab Emirates offered emergency assistance to banks in Dubai, soothing market fears about a looming debt default.
The yen slipped broadly with hedge funds selling it to cover their short positions in yen crosses, and as charts suggested the currency's steep gains last week that took it to a 14-year peak versus the dollar had run their course for now.
The action of the UAE central bank to allay concerns about Dubai debt fallout was providing near-term stability to the market, prompting speculators to reduce long positions in the safer dollar and the yen, traders said.
"Hedge funds are reversing their positions and buying up yen crosses after the Dubai debt worries eased a little bit," said a senior trader for a Japanese securities firm.
The greenback and the yen gained sharply last week as concerns about Dubai sparked unwinding of carry trades, with investors rushing to buy back the low-yielding dollar and yen which they had used to buy higher-yielding currencies and assets such as the Australian dollar.
The UAE's central bank set up an emergency facility on Sunday to support bank liquidity in the first policy response to Dubai's debt woes that threatened to paralyse lending and derail the global economic recovery.
But analysts said the UAE efforts were considered the minimum policy help and this would likely limit the impact.
"The (UAE central bank's) move offers stability to the market, but it also reflects the seriousness of the problem," said Masafumi Yamamoto, chief FX strategist for Japan at Barclays Capital.
"Given the great amount of uncertainty over how the rescue will be conducted and the impact on financial firms, the market continues to be nervous about the Dubai developments."
The dollar index, a gauge of the greenback's performance against six other major currencies, fell 0.5 percent from late U.S. trade on Friday to 74.590, after climbing as much as 1 percent that day and above a 15-month low of 74.170 last week.
The euro rose 0.4 percent to $1.5055. It gained 0.7 percent to 130.46 yen, rebounding from a seven-month low of 126.95 yen touched on Friday on trading platform EBS.
The Australian dollar climbed about 1.2 percent to $0.9170 as Asian stock markets sprang higher after last week's sell-off.
The dollar edged up 0.2 percent to 86.67 yen, well off a 14-year low of 84.82 yen hit on Friday on EBS.
JAPAN TO INTERVENE?
In early Asian trade, the yen rose briefly against the dollar after Japan's Finance Minister Hirohisa Fujii was quoted by the Mainichi daily as saying he would not intervene in currency markets and that now was a time to monitor markets.
Fujii later commented that he had never said intervention was impossible.
The yen's strength versus the dollar was capped by dollar demand from Japanese importers at month-end and gains in yen crosses, traders said.
Given no sign of coordinated intervention, after Fujii had late last week raised the prospect of a Group of Seven joint statement on currencies to cool the yen's rally, market players grew increasingly sceptical over whether the yen's rise was disorderly enough to draw a response from the U.S. or Europe.
But traders and analysts said the chance of unilateral action, if not coordinated intervention, may be growing, with more signs Tokyo was taking the yen's sharp gains as a serious issue that could deepen deflationary pressure on the economy.
The head of the Bank of Japan, Masaaki Shirakawa, said the bank would act decisively if financial markets destabilised again, his strongest hint yet at fresh steps to support markets.
Shirakawa's comment came ahead of an expected meeting with Prime Minister Yukio Hatoyama this week, and a government official said he expected one topic would be whether the BOJ is considering the need for quantitative easing.
The Japanese government is also expected this week to include measures to help ease the impact of the yen's rise on the economy in an extra stimulus budget. (Editing by Joseph Radford) ((satomi.noguchi@thomsonreuters.com; +81-3-6441-1875; Reuters Messaging; satomi.noguchi.reuters.com@reuters.net))