* Dollar/yen rises on short-covering
* Sterling edges up after UK house price rise
* Aussie dips vs dollar after RBA minutes
By Masayuki Kitano
TOKYO, Sept 15 (Reuters) - The dollar edged up against the yen on Tuesday, pulling away from this week's seven-month low on short-covering, while sterling edged up after British house prices rose for the first time in more than two years.
A Japanese newspaper report saying incoming Japanese leader Yukio Hatoyama has picked veteran lawmaker Hirohisa Fujii as finance minister had little impact on the yen, partly because Fujii was already seen as a front runner for the post.
Hatoyama will take office as prime minister on Wednesday.
Fujii said in an interview with Reuters earlier this month that Tokyo should not step into currency markets unless exchange rates move abnormally, and that a strong yen is good for Japan as it curbs import costs.
Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp, said one point to watch is whether Fujii will stick to such a stance after he becomes finance minister.
"If the yen continues to strengthen there is a good chance it will eat into exporters' profits. The question is whether it will be all right for him to just emphasise the merits for imports," Uno said.
The dollar was up 0.2 percent against the yen from late U.S. trading on Monday at 91.15 yen, having risen as high as 91.23 yen earlier, and pulling away from a seven-month low of 90.18 yen hit on trading platform EBS on Monday.
Traders said the dollar rose against the yen due to short-covering, and such dollar buying briefly gained momentum after the dollar rose above the previous day's intraday high near 91.15 yen.
The euro was little changed at $1.4613, having pulled back from a 2009 high of $1.4654 hit on EBS on Monday. Germany's ZEW sentiment index is due later on Tuesday.
The dollar index, which measures the dollar's value against a basket of currencies, was steady at 76.692, staying above a one-year low of 76.457 hit last week.
The dollar dipped as low as 1.0322 Swiss francs on EBS earlier in the day, its lowest since late July 2008, then trimmed its losses to stand at 1.0352 francs, edging up 0.1 percent on the day.
Traders and analysts said the trend was toward further declines in the dollar.
"Strong trends remain in place for the euro, Australian and and kiwi dollar," National Australia Bank said in a note. "Even dollar/yen has all-round signals to the downside. These signals only confirm the overall downside risk in place for the U.S. dollar."
A steady drop in Treasury yields in the past few weeks surprised many and triggered speculation that the U.S. dollar was fast becoming the preferred funding currency for carry trades.
Sterling edged up 0.2 percent to $1.6614 after news that house prices in England and Wales had risen for the first time in more than two years.
The Royal Institution of Chartered Surveyors said its seasonally adjusted balance of surveyors reporting a rise in prices in the last three months versus those reporting a fall rose to 10.7 in August, the first positive reading since July 2007.
The Australian dollar dipped after minutes of the Reserve Bank of Australia's last policy meeting gave little guidance to markets on when the cash rate would be raised from its record low of 3 percent.
The Australian dollar fell 0.2 percent on the day to $0.8603. It had stood at around $0.8620 before the RBA minutes came out.
The market focus now shifts to a slew of U.S. data to be released between Tuesday and Thursday that could determine whether the dollar will continue to trade lower or pause.
U.S. retail sales for August and the September Empire State manufacturing figures are due later in the session, while Federal Reserve Chairman Ben Bernanke speaks at 1400 GMT. Comments from two senior Fed officials on Monday indicated that economic recovery might be less than robust. (Additional reporting by Anirban Nag in Sydney; Editing by Michael Watson)