* Dollar edges higher but gains limited after weak data
* Trade subdued ahead of weekend, China New Year holiday
* Sterling stays weak before GDP, retail sales data
By Kaori Kaneko
TOKYO, Jan 23 (Reuters) - The dollar rose against major currencies on Friday, benefiting after Treasury Secretary nominee Timothy Geithner said a strong U.S. currency was in the United State's interest.
The U.S. currency was also supported by safe-haven bids due to losses in Asian shares, with Tokyo's Nikkei share average falling more than 2.5 percent.
But gains in the dollar were seen capped following downbeat labour market data and weak housing figures.
"There is a move towards risk aversion against countries with fragile economies, notably Europe and the U.S.," said Toru Umemoto, chief FX strategist at Barclays Capital Japan.
He said the yen continued to benefit the most among major currencies partly because it has had relatively smaller exposure to financial trouble.
Geithner's comments on the dollar came on Thursday when he won the Senate Finance Committee's backing to head the U.S. Treasury.
Trade was subdued and investors were seen largely adjusting positions given few major economic events ahead of the weekend and Chinese New Year holidays early next week.
Sterling stayed under selling pressure on persistent concerns about losses in the UK banking sector and economic distress. Traders awaited the UK's preliminary economic growth data for the fourth quarter and retail sales for December, both due later on Friday.
Britain's economy likely shrank 1.2 percent from the previous quarter while the retail sales data is seen showing a fall of 0.6 percent from a month earlier, according to Reuters surveys.
Sterling will likely dip if the data comes in weak, though the currency could then rebound as traders are expected to square positions ahead of the weekend, analysts said.
The dollar was at 89.14 yen, up 0.3 percent from U.S. trading on Thursday but still in sight of Wednesday's low of 87.10 yen, the lowest since July 1995.
The pound fetched $1.3850, down 0.2 percent from New York trade and not far from the 23-year low of $1.3620 hit on Wednesday."
Against the Japanese currency, the pound was up 0.2 percent at 123.44 yen, off the record low of 119.36 yen hit this week.
The euro edged up 0.1 percent to $1.2991 and advanced 0.2 percent to 115.78 yen, stabilizing from a near 7-year trough of 112.08 yen touched on Wednesday. (Editing by Brent Kininmont)