* Aussie hits 2-week high after RBA stands pat on policy
* Dollar retreats from 1-week high vs yen
* Some see conclusion of TPP talks weighing on yen (Updates throughout)
By Patrick Graham
LONDON, Oct 6 (Reuters) - The Australian dollar was the standout performer among major currencies on Tuesday, helped by an unexpectedly relaxed message on threats to growth from its central bank which quelled speculation of further cuts in interest rates this year.
The dollar was again a touch lower against the yen, reflecting the continued nervous mood on markets globally, while most of the other major currency pairs were flat.
The Aussie has been one of the big losers from a slowdown in China over the past year but some traders said there was now a lot of that play priced in to a currency trading around its lowest in six years.
After a poor jobs number from the United States last week shocked markets into worrying more about the pace of expansion there, policymakers at the Reserve Bank of Australia emphasised U.S. growth was still on a strong track.
"The message from the RBA seems to be steady as it goes, there is no panic. They don't sound like they want to cut," said Richard Benson, co-head of portfolio investment at currency managers Millennium Global Investments in London.
"There's already a lot of bearishness on China in the price of some Asia trades and the stability provided by the Chinese central bank has calmed a lot of these trades down."
He argued that had left a lot of investors "short" -- betting on a weaker Aussie -- meaning that the currency might be squeezed higher as some of those players were forced to close such bets.
By 0737 GMT, the Aussie was up 0.4 percent at $0.7111 after touching a 2-week peak of $0.7120.
Action on the major currencies has cooled since the shock of Friday's U.S. jobs numbers, underlining the lack of direction in the pound, the euro and the dollar at a time when stock markets have been gyrating on a debate over global growth.
The dollar has suffered against the yen, but those moves have been cooled by expectations that the Bank of Japan would step in with another round of quantitative easing in aid finally of reflating the Japanese economy.
Nothing so firm is expected from the BoJ's latest policy decision early in Asian time on Wednesday, but traders said it would weigh on markets through Tuesday.
The dollar dipped 0.2 percent to 120.23 yen JPY= having touched a one-week high overnight. It was also 0.2 percent weaker against the euro at $1.1215. EUR=
Analysts in Asia saw the yen coming under longer-term pressure against the dollar after 12 Pacific Rim countries, including the United States and Japan, finally reached the Trans-Pacific Partnership (TPP) pact on Monday.
While TPP negotiations were still underway, the dollar's approach to 125 yen was seen as politically undesirable. Osamu Takashima, head of FX strategy at Citigroup (NYSE:C) Securities in Tokyo, reckoned that scrutiny of the stronger dollar should ease now that the negotiations are over. He said Prime Minister Shinzo Abe's would seek the BOJ's help in another round of fiscal and monetary stimulus for the economy.
"We believe both are essentially negative for the Japanese currency," he wrote. (Additiona reporting by Shinichi Saoshiro in Tokyo; Editing by Janet Lawrence)