* Dollar index pulled back from 6-week highs
* Trump's steel & aluminium tariff plan stops dollar'srecovery
* Euro awaits weekend Italy elections for near-term cues
* Pound edges off 7-week lows, focus on May's speech (Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, March 2 (Reuters) - The dollar sagged on Friday,having pulled sharply back from six-week highs after U.S.President Donald Trump's decision to impose tariffs on steel andaluminium took the wind out of the greenback's week-longrecovery.
The dollar index against a basket of six major currencies .DXY fell 0.15 percent to 90.185.
The index had already shed 0.4 percent overnight, peeledaway from a high of 90.932 - its strongest since Jan. 19 - afterTrump announced on Thursday he would impose steep tariffs onimported steel and aluminium. Trump administration said the tariffs would protect U.S.industry, but the dollar and Wall Street shares slumped as theplan sparked fears of an imminent trade war and worries aboutits potentially negative impact on the world's largest economy.
"Simply put, both the U.S. consumer and corporate sectorsare seen losing out from the tariffs, and that is the logichurting the dollar," said Masashi Murata, senior currencystrategist at Brown Brothers Harriman in Tokyo.
"Corporations will have to raise prices due to the tariffsand pass the cost onto the consumers," Murata said.
While U.S. steel and aluminium manufacturers could benefitfrom higher prices, corporations that have to purchase themetals are expected to suffer.
Prior to Trump's announcement, the dollar had enjoyed arebound from three-year lows plumbed mid-February ashawkish-sounding comments by new Federal Reserve Chair JeromePowell sharpened expectations towards the central bank raisingrates as much as four times this year.
The dollar had sank to the three-year low last month, partlyon fears of U.S. protectionism, and such worries were revivedjust as the currency looked set to shake off weakness sufferedthrough much of February.
"The dollar appeared oversold in February, with the numberof currency bears having increased beyond excess. Prior toTrump's tariff talk some of that excess was being corrected, buthis announcement took the dollar back to square one," said YukioIshizuki, senior currency strategist at Daiwa Securities inTokyo.
The greenback was 0.15 percent lower at 106.065 yen JPY= ,having slid for the past two sessions against the Japanesecurrency, which tends to gain in times of risk aversion andequity market weakness. The dollar fell to as low as 105.960yen, its weakest since Feb. 16.
The euro inched up 0.1 percent to $1.2276 EUR= afterrising 0.6 percent overnight.
The common currency was still poised for a loss of about0.25 percent this week, during which it slid to a seven-week lowof $1.2154 on Thursday when the dollar was still enjoying abroad bounce.
Focus for the euro was on the Italian parliamentary electionscheduled on Sunday and how much support populist agendas couldgarner due to its potential impact on the European Union.
Leading political parties in Germany also decide on acoalition deal on Sunday that would secure Angela Merkel afourth term as chancellor.
The pound was effectively flat at $1.3780 GBP=D3 afterbouncing overnight from a near two-month low of $1.3712.
British Prime Minister Theresa May will lay out her views onhow to keep trade open between all of the United Kingdom and theEuropean Union in a key speech on Friday.
May is due to speak just two days after the EU's chiefnegotiator Michel Barnier struck a downbeat tone on the progressof Brexit talks so far, weakening sterling.
The Australian dollar was steady at $0.7759 AUD=D4 and offthe two-month low of $0.7713 set on Thursday on lacklustredomestic business investment data.
The New Zealand dollar rose 0.3 percent to $0.7271 NZD=D4 .