* Market focus on stocks, commodity prices
* RBA seen keeping rates at record low 3 pct
* Watching for FX diversification comments ahead of G8
By Kaori Kaneko
TOKYO, July 7 (Reuters) - The yen held gains against other major currencies on Tuesday as receding optimism over the global economy prompted investors to pare back holdings of riskier assets.
The dollar was steady after hitting a five-week low against the yen on Monday in the wake of last week's bleak U.S. employment data.
"The market environment now is one of investors reducing risk betting but it has not fully returned to risk aversion. It's still in a phase of correcting excessive optimism over the economy recovery seen previously," said Akira Takeuchi, a manager at Chuo Mitsui Trust and Banking.
"The U.S. has had a mixture of positive and negative economic data, which needs to be examined closely. But the market is now prone to react to weak figures," he said.
Investors were watching the performance of Asian stocks and commodity prices after U.S. shares closed mixed and oil prices settled 4 percent lower on Monday.
Tokyo's Nikkei share average dipped 0.2 percent but MSCI's broad measure of Asian stocks outside Japan edged up 0.4 percent. Crude oil prices ticked higher.
"The market lacks a decisive theme," said Kazuyuki Takami, senior manager at Bank of Tokyo-Mitsubishi UFJ.
"The economy has escaped from its worst period but it is unclear whether it will be on a recovery track or it will sink into a double-dip recession," he said.
The dollar was little changed at 95.36 yen from late U.S. trade on Monday. It hit a five-week low of 94.66 yen the previous day.
The greenback has also been in a correction phase after hitting a six-month high against the yen at 101.45 yen in April but has been stuck in a broad range of roughly 93.50-100.00 yen since then.
The yen has gained sharply against the euro, sterling and the Australian dollar in the past few sessions, hitting its highest in five weeks against the pound on Monday at 152.98 yen and a two-week high at 131.73 per euro.
Sterling was down 0.1 percent at 155.00 yen and the euro shed 0.2 percent to 133.10 yen.
The yen crosses have fallen since early June, after rallying from January to multimonth highs, as the sentiment about global recovery prospects that had driven them up has deteriorated.
The Australian dollar has fallen about 5.5 percent from an eight-month peak at 80.43 yen hit in June and the euro has shed more than 4 percent.
The Reserve Bank of Australia (RBA) will announce its monetary policy decision on Tuesday and is expected to hold interest rates steady at 3.0 percent for a third straight month.
The market has largely priced in the view that the RBA will keep rates unchanged and is looking to the accompanying statement to assess the outlook for policy moves, dealers said.
The Australian dollar was steady at $0.7961 and was little changed at 75.89 yen.
The market was also watching for any comments in the debate on the dollar's role as the world's reserve currency before a meeting of leaders of the Group of Eight industrial nations and leading developing nations on July 8-10 in Italy. (Additional reporting by Charlotte Cooper)