* Yen backs off highs vs dollar and euro
* Aussie gains after Q2 GDP as rate hike expectations rise
* Shanghai shares up, but most other regional stocks fall
By Satomi Noguchi
TOKYO, Sept 2 (Reuters) - The yen retreated from a seven-week high against the dollar and euro on Wednesday, pushed back after economic growth in Australia supported the case for an early rise in rates and powered the Australian dollar higher.
Most regional shares fell as concerns about the financial sector outweighed data showing growth in the U.S. manufacturing sector and dragged Wall Street down, sending the low-yielding yen up against riskier currencies initially.
But the Japanese currency later gave up a chunk of its gains after data showed Australia's economic growth for the second quarter was stronger than expected, helping the Aussie recoup its losses versus the yen and the dollar and rise.
Shares in Shanghai also held up better than others in the region, putting a brake on yen buying by short-term players.
"It's stabilisation for now," said Tomoko Fujii, senior currency strategist at Bank of America Securities-Merrill Lynch.
"But yesterday's very heavy topside despite the good ISM (manufacturing) numbers was disappointing. People thought financial sector concerns were more important than economic data."
The dollar came back to stand unchanged from late U.S. levels at 92.87 yen after hitting a seven-week low at 92.51 yen on trading platform EBS.
Traders said there was talk of automatic sell orders below 92.50 yen and a break there was likely to open the door to July's low of 91.73.
They also said short-term speculative players, drivers of the market at the moment, were building long yen positions, with the risk that a worse-than-expected U.S. employment report on Friday could drive the dollar/yen down to the 90 yen mark.
The euro weakened 0.1 percent on the day to 132.00 yen, having hit 131.47 yen earlier, its lowest since mid-July.
Against the dollar it was flat at $1.4220 after shedding 0.8 percent on Tuesday and hitting a two-week low of $1.4177.
Traders said concerns were building about what happens to the U.S. economy once stimulus effects start to fade, and that was fuelling concerns about the health of the financial sector.
"Optimism about an economic recovery had put a lid on worries about the financial sector, but these are reviving as investors now see a greater chance of a slowdown after the policy-led rebound," said the chief FX manager for a Japanese trust bank.
Trader said some players were waiting on the sidelines ahead of Friday's U.S. jobs report and a private sector jobs survey due later on Wednesday.
The Australian dollar fell more than 2 percent in Tuesday's sell-off but it erased some of those losses after the GDP data and gained 0.5 percent on the day to $0.8317.
Against the yen it came back from a six-week low at 76.37 yen to rise 0.6 percent on the day to 77.17 yen.
Australia's economy grew 0.6 percent on the quarter, its fastest pace in more than a year, as aggressive policy stimulus drove a revival in consumer and business spending, encouraging investors to think there is still a case of an interest rate hike by year-end.
"This was maybe facilitated by inventory build but domestic demand was OK so the rebound of the Aussie today is justifiable," Fujii said. (Additional Reporting by Anirban Nag in Sydney and Charlotte Cooper in Tokyo; Editing by Hugh Lawson)