* Slight equities gains support risk appetite, undermine dlr
* Dollar falls vs sterling after UK house price data
* Focus on U.S. data this week for direction
(Updates, changes byline, dateline, previously TOKYO)
By Emelia Sithole-Matarise
LONDON, Sept 15 (Reuters) - The dollar rose against the yen on Tuesday to hover above seven-month lows on short-covering but underlying sentiment remained fragile ahead of data this week.
The dollar's direction was mixed as it fell against a broadly firmer sterling after British house prices rose for the first time in more than two years, giving a boost to the pound.
Meanwhile, the Australian dollar erased earlier losses made 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.
Market players were unwilling to take big positions ahead of U.S. retail sales data for August, expected to show a 2.0 percent rise after a 0.1 percent decline in July, and the New York Federal Reserve's "Empire State" September manufacturing figures due later in the session.
Traders and analysts said the trend was towards further declines in the dollar.
"The underlying theme is for dollar weakness, and that reflects the fact that the numbers through the week and especially today should remain reasonably upbeat on the economic front," said Daragh Maher, deputy head of global currency research at Calyon in London.
"We've already had the UK RICS housing balance moving back to positive territory. A few bits and pieces sustain the pro- risk angle, which favours the likes of Australian and New Zealand dollars."
The dollar was up 0.2 percent against the yen from late U.S. trading on Monday at 91.13 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 0.2 percent softer at $1.4597, having pulled back from a 2009 high of $1.4654 hit on EBS on Monday.
The dollar index, which measures the dollar's value against a basket of currencies, was steady at 76.765, staying above a one-year low of 76.457 hit last week.
UPBEAT DATA
The dollar dipped as low as 1.0322 Swiss francs on EBS earlier in the day, its lowest since late July 2008, then reversed its losses to gain 0.2 percent to 1.0369 francs after industrial orders fell 17.5 percent in the second quarter compared with a 17.6 percent fall in the year-ago quarter.
Sterling rose 0.3 percent to $1.6618 by 0729 GMT after news 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 stood at $0.8616, little changed on the day.
A steady drop in Treasury yields in recent weeks surprised many and triggered speculation the U.S. dollar was fast becoming the preferred funding currency for carry trades.
But analysts said economic data for August was expected to show a strong rebound in the economy, and what will matter more for the market and the dollar's direction may be the economic picture after the unwinding of stimulus measures.
"Data soon to be released is expected to continue showing firmness in the economy, but such strength may be only temporary," said Masaki Fukui, senior market economist for Mizuho Corporate Bank.
"What the market will be more concerned about are September numbers for U.S. auto sales or consumer spending to see whether or not the economy can keep in good shape after the end of the stimulus measures," Fukui said.
Germany's ZEW sentiment index for September is due at 0900 GMT on Tuesday. Separately, Federal Reserve Chairman Ben Bernanke speaks at 1400 GMT.
(Additional reporting by Satomi Noguchi in Tokyo)