* Investors mull whether dollar buying will last
* Dollar slips vs yen partly on Japanese exporter selling
* Fed Reserve meeting, retail sales to be focus this week
By Kaori Kaneko
TOKYO, Aug 10 (Reuters) - The dollar retained most of its gains against a basket of currencies on Monday but lost ground to the yen as Japanese exporters and short-term speculators took advantage of its jump the previous session on U.S. jobs data.
The dollar rose 2 percent against the yen on Friday and gained more than 1 percent against the basket after the July U.S. jobs report gave the clearest indication yet that the economy is turning around from a deep recession.
For much of the past few months, the dollar has tended to fall after upbeat numbers on the economy, as expectations of recovery prompted investors to take on more risk and eroded demand for safe-haven currencies such as the greenback.
That dynamic, which pushed the dollar to a 10-month low on the six-currency basket last week, could be changing as the market speculates that rates could rise sooner than expected, analysts said, although they warned this could be premature.
Traders said part of the dollar's gains on Friday stemmed from players correcting short positions accumulated in the past few months.
"The market seems to have focused on the U.S. economic fundamentals themselves in the wake of better-than-expected jobs data, which is lagged data," said a trader at a Japanese trust bank.
"But it remains to be seen whether this dollar buying will last. I think that the dollar will again stay under selling pressure as more debt issuance is coming this year," he said.
The dollar index fell 0.2 percent to 78.797, having jumped more than 1 percent on Friday.
"Part of U.S. dollar's snap, crackle and pop can be attributed to the fact that it has been under almost relentless assault for much of the past several months," said David Watt, senior currency strategist at RBC Capital. "A relief rally was overdue."
The euro edged up 0.2 percent to $1.4208, after falling more than 1 percent on Friday, but was below its best level this year of $1.4448, set on trading platform EBS last week.
The dollar fell 0.3 percent to 97.24 yen after hitting an eight-week high of 97.79 yen on Friday.
Dealers said Japanese exporters were selling the U.S. currency ahead of their summer vacation.
This week is shaping up to be a big one, with investors to pay close attention to a two-day meeting of the Federal Reserve starting on Tuesday.
Fed policy-makers are likely to allow a controversial scheme to buy $300 billion of longer-dated Treasuries to end on schedule in September.
They are expected to hold the overnight fed funds rate in a range between zero and 0.25 percent and try to dampen expectations that rates will rise any time soon.
"It is possible that some people are saying the Fed may raise interest rates sooner than expected. But the currency market has not come to that point yet," the dealer at the Japanese trust bank said.
U.S international trade data for June is due out on Wednesday and retail sales for July on Thursday. July consumer prices, industrial production and consumer sentiment for August will all be released on Friday.
In the euro zone, investors will brace for second-quarter gross domestic data. (Additional reporting by Anirban Nag in Sydney; Editing by Joseph Radford)