* Dollar index falls to fresh 4-month low, later trims losses
* Dollar hovers near series of lows vs euro, Aussie, kiwi
* Investor confidence seen continuing positive for now
By Charlotte Cooper
TOKYO, May 11 (Reuters) - The dollar fell on Monday, hitting its lowest in seven weeks on the euro and seven months on the Australian dollar, as investors emboldened by slowing U.S. job losses extended diversification into other currencies.
The dollar index hit a fresh four-month low, following through on a fall on Friday after data showed the U.S. economy shed 539,000 jobs in April, fewer than expected and boosting hopes the worst of the economic slump may be over.
Analysts said that with several risk events out of the way, such as stress tests for U.S. banks and the jobs numbers, investors seemed more confident, although it was hard to see what there was in the way of near-term events to keep up that momentum.
As a result currencies were expected to look to equity markets for now, though Asian stocks were putting in a mixed performance after gains on Wall Street on Friday and S&P futures were down 0.6 percent, indicating a weak U.S. start later.
Sharada Selvanathan, currency strategist at BNP Paribas in Hong Kong, said for euro/dollar at least, the shift stemmed more from investors wanting to diversify their holdings as they grew in confidence rather than from any specific euro attraction.
"It's an adjustment of positions that is not being favourable to the dollar -- buying other overseas equity markets like Asian and European ones," Selvanathan said.
"What you'll see is people adjusting their portfolios -- happy to buy euros, happy to buy a bit of sterling to reposition their portfolios which are probably heavily dollar weighted now."
The ICE futures U.S. dollar index, which tracks the dollar versus a basket of six major currencies, dipped to 82.292, its lowest since early January after crashing through support from its 200-day moving average on Friday.
The dollar index later trimmed its losses to stand at 82.501, up 0.1 percent on the day.
"There seems to be a sea-change at work in terms of general sentiment," said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney.
"It will be an interesting week to see how sustainable that is because there's nothing really in terms of event risk."
The euro hit a seven-week high at $1.3670 on trading platform EBS at one point, although it later trimmed its gains to stand at $1.3630, little changed from late U.S. trading on Friday.
The euro climbed 1.7 percent on Friday, helped by a break through its 200-day moving average, a key resistance on the charts.
Analysts said buying by funds using trading models had been behind some of the action.
The euro dipped 0.1 percent to 134.17 yen after briefly hitting a one-month high at 134.80 earlier. The dollar was steady at 98.44 yen.
The New Zealand dollar climbed to its highest in six months above $0.6100 and the Australian dollar briefly struck a fresh seven-month peak in early Asian trade at $0.7714 before slipping to $0.7671.
Both have gained steeply against the yen this year as currencies seen benefiting once economic activity picks up, particularly in China.
"Market sentiment does not favour yen buying," said a trader for a Japanese bank. "Higher-yielding currencies are likely to keep edging higher against the yen," he said.
The kiwi rose 0.7 percent to 60.00 yen but the Aussie fell 0.8 percent to 75.46 yen, undermined by profit-taking after it struck a seven-month peak in early trade at 76.15 yen. (Additional reporting by Masayuki Kitano; Editing by Chris Gallagher) (Reuters Messaging: charlotte.cooper.reuters.com@reuters.net; (Email: charlotte.cooper@thomsonreuters.com; +81 3 6441 1870))