FOREX-Dollar pauses vs yen after getting lift from U.S. yields

* Dollar/yen steady below 3-month high set this week

* This week's rises in U.S. bond yields underpin dollar/yen

* Sterling slips, awaits U.K. GDP data later on Thursday (Updates prices, adds comments)

By Masayuki Kitano

SINGAPORE, Oct (Shenzhen: 000069.SZ - news) 27 (Reuters) - The dollar held steady near a three-month high against the yen on Thursday, as rises in U.S. bond yields and expectations for the Federal Reserve to raise interest rates this year helped underpin the greenback.

The dollar last stood at 104.49 yen. Earlier on Thursday, it rose to as high as 104.695 yen, nearing a three-month peak of 104.875 yen set on Tuesday.

Helping to bolster the greenback's appeal, the U.S. 10-year Treasury yield rose to 1.813 percent at one point in Thursday's Asian trade, the highest since Oct. 17.

"It's purely a U.S. yield story," said Tan Teck Leng, FX strategist for UBS Wealth Management in Singapore, referring to the dollar's recent rise against the yen.

With (Other OTC: WWTH - news) the Bank of Japan seen likely to keep its monetary policy steady for a while and to stick to its pledge to guide 10-year government bond yields around zero percent, U.S. bond yields will be the main driver for dollar/yen, Tan said.

The market is pricing in a 74 percent chance that the Fed would raise rates by December, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch tool.

The dollar index edged up 0.1 percent to 98.692, staying below a nine-month high of 99.119 set on Tuesday.

Sterling eased 0.3 percent to $1.2213, but remained above an 18-day low of $1.2082 plumbed on Tuesday.

The market will look to the third quarter U.K. GDP data due later in the day for the latest economic clues..

One focus will be whether the data will show that the pound's recent weakness is helping support Britain's economy, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

"But regardless of how the GDP data turns out, there may not be any major impact on the pound in the near-term," Murata said.

The market's focus is on comments from UK policymakers, to gauge their stance toward Britain's renegotiation of its relationship with the European Union, as well as any comments from BoE (Shenzhen: 200725.SZ - news) officials, Murata added.

Fading expectations for a rate cut by the BoE next week have lent support to the pound, which recovered from Tuesday's trough after Bank of England Governor Mark Carney said on Tuesday that the central bank could not ignore the pound's "fairly substantial" recent drop.

The euro eased 0.1 percent to $1.0900, but held above a 7-1/2 month low of $1.0851 struck on Tuesday. (Reporting by Masayuki Kitano; Additional reporting by Shinichi Saoshiro; Editing by Eric Meijer and Simon Cameron-Moore)