FOREX-Dollar catches breather after slide; still shaky on Ukraine tension

* Euro zone inflation data eyed for hints on ECB outlook

* Lingering tensions in Ukraine seen keeping dollar shaky

* Kiwi hits 6-week high on strong business confidence poll

By Shinichi Saoshiro

TOKYO, Feb 28 (Reuters) - The dollar held steady against the yen and the euro on Friday, after a surge in U.S. equities confirmed investor appetite for risk and helped the currency recoup some of the losses suffered earlier on geopolitical concerns.

The dollar remained on shaky footing, however, as another potential flare-up in tensions in Ukraine would support traditional safe-haven currencies like the yen and the Swiss franc and put the U.S. unit on the back foot.

"Isolated incidents from Ukraine will continue to move the dollar at least until elections are held there in May," said Masafumi Yamamoto, chief strategist at Praevidentia Strategy in Tokyo.

"Any losses the dollar suffers against the yen will be temporary, however, as bargain hunters will be ready each time, supported by the notion that real military conflict will be unlikely," he added.

The dollar stood at 102.09 yen JPY= after hitting a low of 101.72 yen on Thursday due to jitters over possible Russian intervention in Ukraine. Reaction was limited to data showing that Japan's core consumer prices rose 1.3 percent year-on-year in January, the eighth straight month of gains. News Search ID:nL3N0LT1I1

Against the dollar, the euro stood little changed on the day at $1.3707 EUR= , after touching a low of $1.3643 on Thursday.

Market participants will be focusing on euro zone data due later on Friday after German data suggested the country's annual inflation probably fell in February, pointing to the prospect of a lower euro zone number that would add pressure on the ECB to act.

Several market players said the euro zone numbers on Friday, forecast to show price growth of 0.7 percent ECONEZ , could be a decider over whether the bank will tweak policy next Thursday.

The euro fetched 139.94 yen EURJPY= , well below this week's peak above 141.00 yen reached on Monday.

The dollar index .DXY , which tracks the U.S. dollar against a basket of major currencies, was little changed at 80.282.

The New Zealand dollar hit a six-week high after a survey showed domestic business confidence at a 20-year high, underlining strength in the country's economy. News Search ID:nW9N0IO02K

The kiwi dollar climbed 0.3 percent on the day to $0.8397, its highest since mid-January.

(Editing by Chris Gallagher)

((shinichi.saoshiro@thomsonreuters.com)(Reuters Messaging: shinichi.saoshiro.reuters.com@reuters.net))

Keywords: MARKETS FOREX/