Dollar trim gains vs yen and euro, BOJ eyed

* Dollar trims gains vs yen and euro, off Wed's highs

* Yen becoming pressured due to fears about Japan's economy

* BOJ to end two-day meeting, announce policy decision

By Satomi Noguchi

TOKYO, Feb 19 (Reuters) - The dollar trimmed gains on Thursday after hitting a six-week high against the yen and a three-month peak versus the euro, but it stayed firm as U.S. efforts to tackle the housing crisis boosted the greenback's safe-haven appeal.

The yen is coming under pressure due to worries about the Japanese economy -- which suffered its deepest contraction in more than three decades in the latest quarter -- and political uncertainty as voter support for Prime Minister Taro Aso sinks.

Market players will be closely watching the Bank of Japan's policy decision due later in the day, in which the central bank could announce it will extend its buying of commercial paper beyond the current March deadline to help ease the credit crunch.

With little room to cut overnight rates after bringing them down to 0.10 percent late last year, the BOJ is focusing on ways to improve funding conditions for financial institutions and companies in an economy hit hard by the global slump.

"There is an emerging view that the yen may not be so appropriate to buy, unlike before, at times of risk aversion," said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities.

Shioiri said Japan's political uncertainty, growing public debt and limited options at the central bank to combat the deteriorating economy with interest rates already so low may be starting to dent sentiment for the yen.

That left the dollar as the main alternative for investors seeking a safe place to park their money after President Barack Obama pledged up to $275 billion to stem U.S. home foreclosures, a root cause of the credit crisis rattling global markets.

The dollar dipped 0.2 percent from late New York trade to 93.65 yen, off Wednesday's high of 93.96 on trading platform EBS, the highest since Jan. 7.

The euro edged up 0.3 percent to $1.2568, recovering from a three-month low of $1.2513 touched the previous day. But worries about euro zone banks with exposure to struggling Eastern European countries kept investors wary of the euro, traders said.

The euro edged up 0.2 percent to 117.65 yen. (Editing by Chris Gallagher)