TOKYO, Japan ? The dollar was under pressure in Asian trade Monday as investors closely watched for possible steps Japanese authorities may take against the yen's strength, dealers said.

The dollar was changing hands at 85.81 yen in Tokyo afternoon trade, down from 86.28 yen late Friday in New York, where the greenback had slumped to the mid-84 yen level last week.

The euro edged up to 1.2791 dollars compared with 1.2750, while it eased to 109.72 yen from 109.95.

Global recovery fears were brought into focus by Japan's weaker-than-expected gross domestic product figures, as it reported that its economy grew at the slowest pace in three quarters during April-June.

Real gross domestic product increased by an annualised 0.4 percent in the quarter, sharply missing forecasts from economists polled by Dow Jones Newswires of 2.3 percent annualised growth.

On a quarterly basis, growth was at 0.1 percent, down from a revised 1.1 percent in the previous quarter.

"The United States and Europe are allowing a weaker currency of their own, because it would help their economic recovery," said Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp.

"Under the environment where the yen would surge if Japan takes no action, market players are carefully watching what the authorities in Tokyo will do."

A stronger yen poses a threat to the export sector driving Japan's fragile economic rebound.
Some dealers fear that the dollar could continue to slide below its all-time-low of 79.75 yen as investors stay focused on uncertain US economic growth.

Investors were watching closely for possible intervention moves by Japanese authorities, with local media reporting that Prime Minister Naoto Kan and Bank of Japan governor Masaaki Shirakawa would meet this week to discuss the recent yen strength.

In Tokyo shares were 0.52 percent lower mid-afternoon on the strength of the local currency, with exporters taking a hit.

"The market consensus is that the Bank of Japan (BOJ) will ease monetary policy in the near term," Tsuyoshi Kawata, senior strategist at Nikko Cordial Securities, told Dow Jones Newswires.

The US Federal Reserve warned last week that recovery in the world's largest economy was facing a slowdown.

The greenback was mixed against other Asian currencies.

It rose to 1.3649 Singapore dollars from 1.3586 Friday, to 1,192.70 South Korean won from 1,183.68, to 45.44 Philippine pesos from 45.21 and to 31.94 Taiwan dollars from 31.91,
It slipped to 8,980.00 Indonesian rupiah from 8,982.50, and to 31.84 Thai baht from 31.89.