* Dollar inches down against euro, yen
* Canadian, Australian dollars dip as oil falls
* Yuan hits 4-year low of 6.60/dollar offshore
(Updates after start of London trading)
By Patrick Graham
LONDON, Dec 30 (Reuters) - The dollar lost ground again to
the yen and euro on Wednesday, adding to a weak end to the year
that has seen it fall more than 2 percent in just under a month
against a basket of currencies.
To most analysts those falls still look to be chiefly the
result of a thin holiday market and some profit-taking on the
U.S. currency's more than 10 percent surge since January. Its
progress against the Chinese yuan and Asia-dependent majors such
as the Australian dollar continued.
Offshore rates for the yuan CNH= fell past lows hit around
a one-off devaluation in August to the lowest in just over four
years, briefly breaching 6.60 yuan per dollar for the first time
since the second half of 2011.
But against the euro, the dollar fell just under 0.2 percent
to $1.0938. EUR=EBS It was marginally weaker on the day at
120.445 yen. JPY=EBS
BNP Paribas (PA:BNPP) strategist Michael Sneyd said the dollar had
lagged significantly behind moves up in U.S. bond yields since
the Federal Reserve delivered its first rise in official U.S.
interest rates on Dec. 16.
"We would put that down to most market participants being
out of the market at the moment. That may change next week," he
said. "Long dollars still seems to be a stand out opportunity
particularly with the euro almost at $1.10 and the yen at 120
(per dollar)."
Against a basket of currencies .DXY , the dollar fell 0.1
percent to 98.166, off a one-week peak of 98.413 touched on
Tuesday.
The Canadian and Australian dollars were both down about 0.1
percent, also suffering from another 2 percent fall in crude oil
prices. O/R
While the consensus among major bank analysts on the dollar
is still for it to gain against peers such as the euro and yen
in 2016, such forecasts are less widespread than a year ago and,
with some exceptions, stop short of predicting a rise to parity
with the euro.
The fall in oil prices and worries over world growth have
also generated less certainty about the pace of further rises in
U.S. interest rates.
"The yen is basically expected to weaken on U.S.-Japanese
yield differentials. But it will be exposed to volatility until
U.S. economic growth looks assured, and we could see even wider
swings in case of a warm winter," SMBC Nikko Securities chief
economist, Junichi Makino, wrote.
"Thus a clear yen-weakening trend may not be established
until the spring."
(Editing by Louise Ireland)