* Euro pauses below 5-month high of $1.3684
* Dollar index holds above latest 8-month low
* Risk currencies, yen crosses subdued after retreat
By Charlotte Cooper
TOKYO, Oct 1 (Reuters) - The euro paused below a five-month high on the dollar on Friday and the greenback steadied after dropping to an eight-month low against a basket of currencies the previous day, with the market looking ahead to U.S. and Chinese data.
The dollar also held steady at 83.55 yen, backing away from the previous day's low at 83.16 yen and moving further off last month's 15-year low below 83.00 which had prompted Japanese authorities to intervene for the first time in six years.
Data on Thursday showed new U.S. jobless claims fell last week, regional manufacturing grew faster than expected and consumer spending was slightly stronger than expected earlier in the year, injecting a little caution about the prospects for more quantitative easing from the Federal Reserve.
"The positive data may have given investors pause in their expectation for further easing but easing concerns will persist unless we see continued data improvement," wrote Brian Kim at UBS in a morning note.
"And it will be key how Treasury yields react to the data releases, as higher yields could provide some respite for the dollar."
The Institute for Supply Management (ISM) releases its September manufacturing index at 1400 GMT. Economists in a Reuters survey expect a reading of 54.5 versus 56.3 in August.
PROSPECTS FOR QE
Last week a Fed statement included a comment that inflation was below levels it judged as consistent with its mandate to promote employment and price stability, and the market will also watch the personal consumption expenditure deflator.
"The risk trade to some extent will take its cue off U.S. Treasuries as much as equities, since if the market starts to waver at all on the prospects for QE, the back end is where it is going to show up," wrote Alan Ruskin, Deutsche Bank's global head of G10 FX strategy, in a client note.
"The data introduces a small degree of additional QE insecurity going into the ISM data and probably takes the edge off the long risk trade for now."
That left the yen retaining most of the previous session's gains against higher-yielding currencies such as the Australian dollar. The Aussie was flat at 80.61 yen and edged down slightly to $0.9656, after it hit a two-year high of $0.9734 on Thursday.
The market will also be watching China's official purchasing managers' index for September due around 0100 GMT. Forecasts are for a gain to 52.0 from 51.7 in August, although speculation swirled in the market it might be higher.
The euro held steady at $1.3634 after hitting a five-month peak of $1.3684 on Thursday, helped by data showing euro zone banks are relying less on funds from the European Central Bank.
The dollar index rose 0.1 percent to 78.762 after dropping as far as 78.414 on Thursday.
Data late on Thursday showed Japanese authorities spent 2.12 trillion yen, or $25.4 billion, on currency intervention in the month to Sept. 28.
This was roughly in line with market estimates of 2 trillion for Sept. 15 alone, the only confirmed instance of Japanese currency intervention during that period. (Editing by Edmund Klamann)