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FOREX-Kiwi dips on dairy worries, dollar holding strong

* New Zealand dollar slips after Fonterra cuts payout forecast

* Dollar index holds near six-month peak, euro eight-month trough

* Fed, U.S. GDP & payrolls key tests for markets this week

* Euro zone inflation and China PMI also in focus (New throughout, changes dateline from previous SYDNEY/SINGAPORE)

By Patrick Graham

LONDON, July 29 (Reuters) - The New Zealand dollar was the main loser among developed world currencies on Tuesday, down almost half a percent on a sign of weakness from the country's influential dairy sector.

Other major currency pairs were stuck in tight ranges, with the dollar close to six-month peaks against a basket of currencies ahead of a raft of data and policy releases starting with GDP and a Federal Reserve statement on Wednesday.

The yen weakened briefly past 102.0 yen per dollar, with some traders pointing to a warning from Russia that plans to impose sanctions would harm relations between the two countries.

In early European deals, the kiwi was down 0.45 percent at $0.8508, its weakest level since June 10, after dairy giant Fonterra slashed its forecast payout to farmers in the new season by 14 percent.

"This is all about the dairy market and a bit of carry over from last week," said one London-based dealer. "We saw some weakness yesterday as well but it recovered pretty quickly."

New Zealand is the only developed world economy where interest rates have already risen, supporting solid gains for its dollar this year. Rates are now expected to remain on hold until the end of the year, however, as the central bank assesses impact on growth and inflation.


Moves among major currencies were generally subdued, with the greenback holding firm ahead of the Fed's two-day policy meeting that starts on Tuesday, and key data this week such as U.S. gross domestic product and the non-farm payrolls report.

The dollar index, which measures the greenback's value against a basket of major currencies, held steady at 81.030 . It had risen to 81.084 late last week, its highest level since early February.

The euro eased about 0.1 percent to around $1.3432, pinned near an eight-month trough of $1.3421 set on Friday.

"You're seeing the euro capped at around $1.3450 ahead of tomorrow's events. There is some hope that the result of this week's outcomes in the U.S. will perpetuate the rally in the dollar," said Stephen Gallo, a strategist with BMO in London.

In a sign of increasingly bearish market sentiment toward the euro, data from a U.S. financial watchdog late last week showed speculators increased their net short position in the euro to 88,823 contracts in the week to July 22. That marked the most bearish positioning against the single currency since late November 2012.

The U.S. economy needs to do well in order for such euro-selling sentiment to persist, said Daisuke Karakama, chief market economist for Mizuho Bank in Tokyo.

"If bets accumulate too much in that direction though, you do have to be wary about the possibility of a sudden reversal," Karakama said.

The dollar held firm versus the yen, edging up 0.1 percent to about 101.99 yen.

Besides the Fed policy meeting and U.S. jobs data, euro zone inflation and PMI surveys for China and the euro zone later this week are also on investors' radar.

The Fed is seen likely to cut its monthly bond-buying programme by another $10 billion as it looks to wind up the scheme later in the year, but the focus for markets is on any clues to the timing of the first interest rate hike.

(Additional reporting by Masayuki Kitano in Singapore and Ian Chua in Sydney; Editing by Catherine Evans)