NZ dollar bides time as stocks slow; debt firmer

* NZ dollar falls back in safe range as risk appetite fades

* Kiwi seen driven by stock market fortunes

WELLINGTON, Aug 24 - The New Zealand dollar <NZD=> sat within sight of 10-day highs on Tuesday, but was struggling to push higher as stock markets gave up their recent strong rallies.

Investors were also cautious ahead of economic data later in the day from the U.S. and Europe.

Asian stocks were generally flat, but the Shanghai Composite Index <.SSEC> was down more than 3 percent, dampening the appetite for riskier investments such as high yielding currencies.

"With little clear direction coming from the global backdrop, we suspect the NZ dollar will tread water within familiar ranges," said BNZ Capital senior strategist Danica Hampton.

The kiwi was virtually unchanged from Monday's late local trade at $0.6850/60 at 0500 GMT. It traded a tight $0.6840-0.6861 range.

The currency was unmoved by a government decision to extend its deposit guarantee scheme for retail investors until the end of 2011, albeit with more strict conditions. See [ID:nWEL356956]

The Reserve Bank of New Zealand's quarterly survey of business leader expectations, which showed little change in the outlook for inflation, economic growth or monetary conditions, also passed largely unnoticed [ID:nWEL441804].

Investors showed little reaction to the news that U.S. Federal Reserve Chairman Ben Bernanke would be reappointed for another term, although the decision was seen by analysts as important for maintaining stability. [ID:nN24151253]

"It clears out one uncertainty. Given that Bernanke has handled the crisis very well and is held in high regard by the markets, the announcement will be taken positively," said ANZ-National Bank senior strategist Khoon Goh.

Later on Tuesday the market will be watching for reports on U.S. house prices and consumer confidence for the latest insight in the breadth and depth of economic recovery.

There are also releases of Germany's revised second-quarter gross domestic product and the first of three U.S. Treasury bond auctions due this week.

The NZ dollar is seen supported at $0.6800 with initial resistance around $0.6890, and then $0.6950.

New Zealand government bonds turned firm as caution restrained stock markets. The yield on the benchmark NZ 10-year bond <NZ10YT=RR> was 4 basis points lower at 5.74 percent.