* Dollar gains 0.8 percent vs yen on short-covering
* Euro retreats after early push above $1.3800
* BOJ, RBA, IMF meet this week, plenty of event risk
By Charlotte Cooper
TOKYO, Oct 4 (Reuters) - The dollar surged higher on Monday in a short-covering rally against the yen, which retreated against other currencies as investors unwound some long yen positions ahead of a Bank of Japan policy meeting this week.
Few see surprises from the BOJ meet, which ends on Tuesday, with expectations that policy makers will extend a cheap fund-supply tool to help shore up the economy.
But some traders said the dollar had been helped by a bit of speculation in the market that any step might be followed by yen-selling intervention just when players would not be expecting it ahead of an IMF meeting.
Financial leaders gather for the International Monetary Fund meeting this week and the concept of countries keeping their currencies weak for export-gain is likely to be a hot topic.
Dollar short positions have been building as expectations have risen that the Federal Reserve is close to resuming quantitative easing to give a sluggish U.S. economy a boost.
"It's still a dollar-negative situation but short-term probably the market has priced a lot in," said Masafumi Yamamoto, chief FX strategist Japan at Barclays Capital.
Traders said the dollar had triggered stops at 83.40 yen and up to 83.60/70 yen, sending it as high as 83.88 yen.
It hit a 15-year low of 82.87 yen on Sept. 15, just before Japan intervened for the first time in six years to curb yen strength, and the market has been cautious about selling the greenback too aggressively against the yen ever since.
Cabinet Secretary Yoshito Sengoku cautioned in a weekend interview with Reuters that current yen moves were too speculative.
But traders reported dollar offers were also lined up above 84.00 yen, capping its gains. It rose 0.4 percent to 83.56 yen.
Currency speculators' bets against the dollar swelled to $22 billion in the week to Sept. 28, the largest value since at least mid-2008, data from the Commodity Futures Trading Commission showed.
Long positions in the euro jumped to 35,330 contracts from 5,097 in the previous week, while long positions in the yen rose to 28,666 contracts from 23,100.
The euro, which hit its highest in more than four months at 115.29 yen also took out stops. It rose 0.3 percent on the day to 115.15 yen.
The euro had a quick run above $1.3800 to its strongest levels since mid-March in very early Asian trade but then retreated as sell orders from Middle Eastern banks kicked in, one trader at a Canadian bank said.
It fell 0.2 percent to $1.3760, but was still holding on to most of Friday's gains, when it rose 1 percent.
"Despite massive problems in Europe, it still seems to be the only alternative to the U.S. when it comes to diversification of FX reserves," said Robert Ryan, FX strategist at BNP Paribas in Singapore.
The dollar index edged up 0.2 percent to 78.195, after hitting an eight-month low on Friday of 78.029.
Data on Friday showed U.S. manufacturing growth slowed last month and inflation remained subdued in August, leaving the door open for the Fed to launch a fresh round of easing.
Two Fed policymakers also said more action would likely be needed unless the outlook improved, and investors will be watching jobs data this Friday for more clues.
Australia has a partial holiday on Monday. The Australian dollar eased 0.2 percent to $0.9696 but was still close to a two-year high of $0.9751 set on Friday.
The central bank holds a rate review on Tuesday and is seen as more likely than not to raise the cash rate by 25 basis points to 4.75 percent, although the decision is not seen as a done deal. If it does, the move would be the first since May. (Additional reporting by Masayuki Kitano and Hideyuki Sano, and Reuters FX analyst Krishna Kumar in Sydney; Editing by Joseph Radford)