* Aussie, kiwi slide as Europe shares, oil pare gains
* Dollar supported as traders await FOMC
* Eyes on U.S. Treasury quarterly refunding ahead of Fed
(Adds quotes, updates prices)
By Naomi Tajitsu
LONDON, Aug 11 (Reuters) - High-yielding currencies fell on Tuesday, hit after European shares and oil prices relinquished early gains, while the dollar was being supported as investors pondered whether it could sustain gains from a recent rally.
The Australian and New Zealand dollars fell as European stocks fell 0.3 percent, prompting traders to sell currencies seen to be higher-risk versus the dollar and the yen.
But the dollar was supported after U.S. jobs data last week boosted expectations for higher U.S. interest rates by early 2010, and investors awaited a Federal Reserve policy announcement on Wednesday for directional cues for the currency.
Analysts said there were few market-moving events in the European session, and with trading volumes thinning as the summer holiday season gets underway, some said currencies were vulnerable to movements in other markets. "Oil has dropped back from the day's high, that could be a driver, said Peter Frank, currency strategist at Societe Generale in London. "In very thin volumes, it looks like there's a certain amount of risk aversion going on."
By 1114 GMT, the euro was up 0.2 percent to $1.4169, but stayed close to a one-week low around $1.41 hit on Monday. Traders saw support at the 40-day moving average around $1.4095.
The market showed little reaction to German consumer price inflation which was revised up to show a fall of 0.5 percent in July year-on-year, while the harmonised consumer price index posted its first annual drop since the index was introduced in 1995.
The Australian dollar fell 0.2 percent to $0.8355, while the New Zealand dollar slipped 0.7 percent on the day, after U.S. crude oil prices retreated from the day's high of $71.22 per barrel to $70.83, up 0.3 percent on the day.
The yen gained broadly, pushing the Aussie down 0.9 percent to 80.63 yen, off a 10-month high of 82.00 yen on Monday, while the New Zealand dollar fell 1.5 percent to 64.72 yen, also retreating from a 10-month peak at 65.90.
Markets brushed off the Bank of Japan's decision to keep interest rates at 0.1 percent. BOJ Governor Masaaki Shirakawa said he saw no risk of a deflationary spiral in Japan.
The dollar was down 0.6 percent at 96.48 yen, off an eight-week high of 97.79 yen set last week.
FED AHEAD
The euro hit the day's high against the Swedish crown of 10.33 crowns after ratings firm Standard & Poor's cut sovereign credit ratings for Estonia and Latvia on Monday. Swedish banks are heavily exposed to the Baltic region, which is gripped by deep recession.
The dollar has held onto most of its post-payrolls gains, which has prompted some in the market to wonder if the trend to sell the dollar on strong economic data is nearing an end.
Many remain cautious about this, as the dollar had a similar short-lived climb in early June, when a smaller-than-expected drop in payrolls also spurred speculation U.S. interest rates would start to rise sooner than expected.
"The dollar is holding onto Friday's payroll-inspired gains, but it needs some fresh support to avoid sinking back as it did in June," said Chris Turner, head of FX strategy at ING.
The Fed is expected to keep rates steady at 0-0.25 percent on Wednesday, but paint a slightly brighter economic picture while dampening rate hike speculation. It is also likely to end its $300 billion Treasury purchases programme, as scheduled.
Traders will keep an eye on the U.S. Treasury's quarterly refunding, where it will auction $37 billion dollars of 3-year notes on Tuesday of a total $75 billion on offer this week. (Additional reporting by Tamawa Desai, editing by Chris Pizzey)