FOREX-Euro up vs dlr, but gains capped by Greek PM comments

* Sarkozy comments help euro on receding Greek concerns

* Greek PM remarks capping euro gains

* China hints it may allow yuan appreciation in future

* Aussie, New Zealand dollars trading higher (Updates prices, adds comment)

By Gertrude Chavez-Dreyfuss

NEW YORK, March 8 (Reuters) - The euro rose slightly against the dollar on Monday as concerns about Greece's fiscal crisis eased after French President Nicolas Sarkozy said there are plans to support the debt-strapped country, if necessary.

For Sarkozy's Sunday remarks, click on [ID:nPAB008209]

Gains in the euro, however, were limited after Greek Prime Minister George Papandreou on Monday warned that if the Greek crisis worsened it could lead to a new global financial meltdown. [ID:nLDE6271WD].

"Sarkozy giving a thumbs up to the euro and an EU backing for Greece gave us a better bid tone before we started the market this morning," said Dean Popplewell, chief currency strategist, at OANDA in Toronto.

"But with the lack of North American data especially after last Friday's surprising U.S. employment report, the market is sitting back and digesting the comments out of Europe especially from Papandreou."

In quiet, late afternoon trading, the euro <EUR=> was slightly higher at $1.3629.

Greece has been a drag on the euro in 2010, which has lost 4.8 percent against the dollar so far this year and 7.6 percent against the yen.

The euro though has held up well this month, trading flat against the dollar after falling 1.5 percent in February. Popplewell said the currency's bias is still clearly negative.

"People do believe Greece's problems are far from over and contagion is certainly a strong possibility," he said.

Yuan non-deliverable forwards, meanwhile, rose to a five-week high after the Chinese central bank chief hinted China would eventually drop the dollar/yuan peg it had imposed since mid-2008 to help fight the global financial crisis. [nTOE62707B]

China has effectively re-pegged its exchange rate at around 6.83 yuan <CNY=CFXS> per dollar since mid-2008.

The China news had little impact on the currency market, although analysts said going forward the Chinese move should make Japanese authorities comfortable with allowing the yen strengthen a bit more.

On Monday, the dollar was flat against the yen at 90.27 yen <JPY=>. The euro was also little changed against the Japanese currency at 123.04 yen <EURJPY=>, having hit a two-week high earlier on Monday.

"Fears of further monetary policy easing by the Bank of Japan seem to have abated somewhat...ahead of next week's policy meeting," said Matthew Strauss, senior currency strategist, at RBC Capital Markets in Toronto.

"However, given the deflationary environment, do not be surprised if market chatter returns to this topic (easing) in the very near future, weighing on the yen."

The Australian dollar <AUD=> was up 0.3 percent at US$0.9094, having earlier risen to its highest since Jan 21.

The higher-yielding currency, boosted by improved risk sentiment, gained further after Royal Dutch Shell <RDSa.L> and PetroChina <0857.HK> are bidding more than $3 billion for Australia's Arrow Energy <AOE.AX>. [ID:nSGE62602R]

Analysts said a break above US$0.9100 helped the currency extend gains, with the next target seen at US$0.9150.

Against the yen <AUDJPY=R>, the Aussie was at 82.09 yen, up 1.7 percent, having earlier hit a two-week high.

The New Zealand dollar <NZD=> rose 0.5 percent versus the U.S. dollar to US$0.6999.

The Aussie and New Zealand dollars were also supported by what seemed like improving risk appetite, with U.S. stocks flat to slightly up and U.S. crude futures trading modestly higher.

(Additional reporting by Nick Olivari; Editing by Diane Craft)