* Yen retreats from four-week high as Shanghai shares rebound
* Cautious tone in Fed minutes holds back dollar
* Aussie dollar recovers from six-year year lows
By Patrick Graham
LONDON, July 9 (Reuters) - The yen surrendered some of this week's gains and the Australian dollar jumped on Thursday after Chinese stocks showed signs of stemming a rout that has rippled through global markets.
The six percent gain .CSI300 .SSEC in Shanghai shares was enough to prompt optimism from investors after a rough month dominated by the euro zone's troubles with Greece and a drop of more than 30 percent in China's main market indexes.
Those elements were behind the biggest one-day push this year into the perceived safety of the yen on Wednesday. It had fallen only half a percent in value against the dollar in early European deals on Thursday.
"China is definitely setting the tone for forex markets at the moment," said Thu Lan Nguyen, G10 currency strategist with Commerzbank in Frankfurt.
"We were in risk-off mode for the last couple of days. The big question is are the measures that China has taken sustainable given that most stocks are not tradable at the moment."
The euro was around a third of a percent lower, having topped $1.11 in Asian trade. Attention will be glued to proposals expected from Athens for a deal to keep Greece and its banks financially afloat.
The head of Germany's Bundesbank, Jens Weidmann, said on Thursday that no further central bank liquidity support should be given to Greek banks. ID:nF9N0Y3028
The dollar was up 0.5 percent at 121.325 yen JPY= , after tumbling 1.5 percent on Wednesday to suffer its biggest drop since December. It fell as far as 120.410 yen as investors unwound short positions amid a slump in global equities triggered by the selloff in Chinese stocks.
"The yen's downside is probably limited, because nobody knows what will happen in China, and Japanese stocks are still fragile," said Kaneo Ogino, director at Global-info Co in Tokyo, a foreign exchange research firm.
A fall in U.S. yields following the release of minutes of the Federal Reserve's June meeting offered little hope to dollar bulls. The dollar index .DXY dipped as low as 96.123 in Asian trade. ID:nL1N0ZO1RO
By 0752 GMT, it had recovered to trade up less than 0.1 percent at 96.371.
San Francisco Fed President John Williams said he still believed the Fed will raise interest rates this year but was "wary of acting before gathering more evidence that inflation's trajectory is on the desired path." ID:nL1N0ZO252
Along with China, that more measured tone helped the Australian dollar rise above 74 U.S. cents AUD=D4 , up from a six-year trough of $0.7372. It was last up 0.4 percent on the day at $0.7463.