(New throughout, updates headline and prices and adds analyst

comments)

* Yen slips but fall limited by recent intervention

* Trump says talks with Iran under way despite Tehran's

denial

* Dollar index edges lower; focus on U.S. nonfarm payrolls

By Chibuike Oguh

NEW YORK, Aug 4 (Reuters) - The yen eased on Tuesday but

held on to most of its gains from last week's rare coordinated

intervention by Tokyo and Washington.

The Japanese currency had rallied as much as 5% over the last

three trading sessions, with Japan confirming coordinated

yen-buying intervention on Friday with the U.S. in a rare move.

The yen was last down 0.25% at 157.56 per dollar,

paring some of its gains after hitting a three-month high of

155.20 the previous session but remaining well above its 40-year

low of 163.99 touched in July.

The joint action by Japan and the U.S. appears to be

signalling to the market not to short the yen, said Axel Merk,

chief investment officer at Merk Investments.

"As most people would agree that interventions in the currency

markets have a limited impact in the medium term. So I think

it's about signalling and posturing to tell the market, 'Hey!

Don't short the yen so much!'"

Against the euro, the yen slipped 0.33% to

181.36, down from Monday's almost nine-month high of

179.435.

Two market sources told Reuters that the U.S. Treasury bought

yen for euros last week instead of selling dollars, a highly

unusual move likely aimed at helping Japan strengthen the yen

without encouraging a view that Washington wants a softer

dollar.

Monday's surge in the yen stirred speculation that Japanese

authorities had intervened again, although officials offered no

confirmation.

The underlying outlook of the yen has not changed,

notwithstanding the unusual nature of multilateral currency

interventions such as that by Japan and the U.S. - which tend to

occur during periods of heightened market volatility, said BNP

Paribas analysts led by Ishan Gurnani in an investor note.

"We are not yet convinced. While the risk-reward for long

USDJPY is less attractive than it was before the intervention

late last week, we still believe that the pair will end the year

higher than current levels," the analysts said.

DOLLAR STEADIES

The dollar edged lower against major currencies after recent

losses triggered by the yen-buying intervention and a decline in

oil prices.

Qatar said mediators were making progress in efforts to end the

Iran war on Tuesday, although Tehran has denied President Donald

Trump's assertion that talks are already under way.

The euro was up 0.15% against the greenback at

$1.1524. Sterling strengthened 0.17% to $1.3452.

Against the Swiss franc, the dollar

weakened 0.1% to 0.809.

The dollar came under pressure after the Federal Reserve

held interest rates steady last week, with losses accelerating

following the intervention to support the yen.

The dollar index eased 0.1% at 99.89.