* Dollar steadies after touching 18-month low of 106.14 yen

* Japanese officials concern over yen's strength

* Sterling reaches 5-month highs as Brexit fears recede

* Euro hits 8-month high above $1.1500 (Updates late U.S. market action)

By Richard Leong

NEW YORK,maalox and aquaphor for diaper rash May 2 (Reuters) - The dollar edged up against the yen on Monday following its biggest weekly loss in more than seven years, but it declined against other major currencies, particularly the euro, which was helped by stronger German manufacturing data.

Worries over Japanese policymakers' inability to stem the yen's rise had pushed the dollar to an 18-month low of 106.14 yen in early Asian trading. It later bounced as high as 106.81 yen before easing to 106.50 yen, up 0.1 percent on the day.

Finance Minister Taro Aso was quoted in Japanese media over the weekend as saying he viewed the yen's strength as "extremely concerning," stoking speculation the Bank of Japan might intervene to stem the currency's rise.

Bank of Japan Governor Haruhiko Kuroda said on Monday the yen's recent rise could hurt the world's No. 3 economy.

"It's a difficult process for the BOJ to manage," said Sebastien Galy, currency strategist at Deutsche Bank in New York. "It's too early for them to intervene."

The dollar index dipped 0.35 percent to 92.747 after hitting its lowest since January 2015 at 92.568.

The greenback has fallen since mid-March after Federal Reserve Chair Janet Yellen signaled the Fed would proceed with further rate increases with "caution" due to global risk and domestic inflation stuck below its 2 percent goal.

"The dollar had been so strong but it hasn't been supported by the data. Now it's correcting," Galy said.

The dollar's weakness intensified due to BOJ's surprise inaction on further stimulus at its policy meeting last week.

Last week's nearly 5-percent gain for the yen was its biggest since the 2008 crisis and pushed "long" bets on more gains to the highest on record.

With British markets closed for a holiday on Monday, sterling reached a five-month peak versus the dollar on receding worries about the "Brexit" referendum on June 23. The pound was last up 0.4 percent at $1.4660.

Monday's data on global manufacturing supported the notion of sluggish global growth. U.S. factory growth slowed more than expected in April, while Chinese manufacturing activity expanded only marginally.

German factory data, however, showed the sector grew solidly. That lifted the euro to $1.1532, the highest since late August, according to Reuters data.

An Australian central bank meeting will be a focus on Tuesday. The Aussie dollar was up 0.7 percent at $0.7656 on Monday, adding to an 11 percent surge since hitting multi-year lows in January.

(Additional reporting by Patrick Graham in London, Hideyuki San in Tokyo; Ian Chua in Sydney; Editing by Dan Grebler and Nick Zieminski)

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