* Yen steadies, dollar stuck near six-week lows

* Oil below $80 a barrel but uncertainties loom

* Traders await US payroll data for Fed clues

(Updates for late European morning trading)

By Samuel Indyk and Jiaxing Li

LONDON, Aug 6 (Reuters) - Currency markets drifted on

Thursday with the Japanese yen retracing some intervention-led

gains and the dollar edging away from a six-week low, as

investors awaited more details on a proposed U.S.-Iran deal and

looked ahead to Friday's U.S. jobs report.

The yen was a touch softer at 157.85 per dollar following

modest declines over the past two sessions. It has now given

back some intervention-driven gains after touching 155.20 per

dollar on Monday, but remains well off a multi-decade low of

almost 164 reached in July.

"Stretched positioning, the involvement of the U.S. and the

fact that the yen is historically undervalued all suggest that

the current round of intervention has a better chance of

propping up the yen for longer than some previous ones," said

Jonas Goltermann, chief markets economist at Capital Economics.

The euro was down about 0.1% at $1.1542 and sterling

fell a similar amount to $1.3460.

The dollar index, which tracks the U.S. currency

against six major peers, was up 0.1% at 99.77, edging higher

after it hit a six-week low on Monday.

EYES ON THE GULF

Markets remained watchful as tensions continued to play out in

the Gulf, after Reuters reported a proposed deal between Iran

and Oman to help end the U.S.-Iran conflict could give Tehran

control over inbound traffic through the Strait of Hormuz.

However, there was no immediate U.S. comment on the proposal.

President Donald Trump has said a deal to reopen the strait was

imminent, but U.S. officials have repeatedly insisted they would

never agree to Iran controlling access to the world's most

important trade route for energy supplies.

Brent crude inched higher to around $80.20 a barrel,

although prices remain well below the almost $100 per barrel hit

in July when tensions between Iran and the U.S. flared.

"We haven't got the oil market volatility that has really

been the key driver of most markets in recent days and weeks,"

Ray Attrill, head of FX strategy at National Australia Bank,

said in a podcast.

PAYROLL DATA IN FOCUS

Investors are now also turning their focus to U.S. payroll data

that could provide more clues on the Federal Reserve's interest

rate path, after data showed the country's services sector

stayed strong in July while services-sector employment slowed.

A divided Fed left rates unchanged last month but Chair Kevin

Warsh delivered an unwavering commitment to bring inflation

lower, leaving the door open to a possible rate hike in

September.

"Any data release after the Fed meeting in July is just very

important," said ING FX strategist Francesco Pesole.

"Tomorrow's payrolls could be pretty big for dollar-yen. If

it's a hot print then you would probably start to see a new

build up of speculative longs on dollar-yen."

A Reuters survey of economists expected July's employment

report on Friday to show nonfarm payrolls increased

by 80,000 jobs in July after rising 57,000 in June. The

unemployment rate is forecast to hold steady at

4.2%.

Fed Governor Lisa Cook said on Wednesday that she was open to

the idea that the central bank may need to raise its short-term

interest rate target to deal with "too high" levels of inflation

in the U.S. economy.

San Francisco Fed President Mary Daly said she was "completely

supportive" of last week's decision to hold rates steady and

said more data is needed before September's meeting.

(Reporting by Samuel Indyk in London and Jiaxing Li in Hong

Kong; Editing by Jamie Freed and Ros Russell)