* Euro rebounds from five-month low vs dollar, above $1.35     * Major Wall Street stock indexes pare initial losses     * Trading volume muted on Japanese holiday   (Update market action)     By Richard Leong     NEW YORK, July 21 (Reuters) - The U.S. dollar held steady against major currencies on Monday as investors reduced holdings of stocks and other risky assets on anxiety about escalating violence in Gaza and Ukraine.     Demand for traditional safe-haven yen and Swiss francs persisted but was not strong enough to push them out of recent trading ranges against the dollar, as traders have been assessing whether the fighting in these regions would affect the global economy, analysts said.     Volumes were light due to a holiday in Japan.     "There doesn't seem to be a bearish sentiment on the real economy yet," said Sebastien Galy, currency strategist at Societe Generale in New York.     The dollar index  
   .DXY
    edged up 0.03 percent at 80.555 after hitting a four-week high last Friday.     The greenback was little changed against the yen at 101.36 yen  
   JPY=
    with benchmark Treasury yields hovering at their lowest in over seven weeks. The dollar slipped 0.1 percent against the Swiss franc  
   CHF=
   , last trading at 0.8978 franc.     The euro recovered against the dollar despite a sell-off in European shares  
   .FTEU3
   . It traded steady at $1.3523  
   EUR=
   , well above Friday's five-month low of $1.3491. Support is seen at $1.3460/80, an area that has provided a floor on several occasions in the past 10 months or so.     "There might be a temptation for the market to probe those lower levels," Galy said.     Wall Street shares were weaker but managed to pare initial losses. The Standard & Poor's 500 index  
   .SPX
    was down 0.2 percent after falling as much 0.6 percent earlier.  
   .N
        The MSCI world stock index  
   .MIWD00000PUS
    slipped 0.2 percent on the day.  
   MKTS/GLOB
        Lower U.S. yields kept a lid on the dollar as some traders favored lower-risk government bonds over stocks. The yield on benchmark 10-year notes  
   US10YT=RR
    dipped 1 basis point to 2.47 percent, near a seven-week low set last week.  
   US/
      (Additional reporting by Anirban Nag in London and Ian Chua in Sydney; Editing by James Dalgleish)  ((richard.leong@thomsonreuters.com)(+1 646 303 6313)(Reuters Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net)(Twitter @RichardLeong2))  
 ((         Currency bid prices at 03:05PM (1905 GMT) Description    Last    U.S. Close  Previous   Session    Pct Change Euro/Dollar    $1.3523    $1.3524    -0.01% Dollar/Yen    101.3600    101.3200    +0.04% Euro/Yen    137.07    137.07    +0.00% Dollar/Swiss    0.8975    0.8987    -0.13% Sterling/Dollar    1.7077    1.7086    -0.05% Dollar/Canadian    1.0734    1.0729    +0.05% Australian/Dollar    0.9374    0.9388    -0.15% Euro/Swiss    1.2142    1.2150    -0.07% Euro/Sterling    0.7919    0.7910    +0.11% NZ Dollar/Dolar    0.8690    0.8697    -0.08% Dollar/Norway    6.1960    6.1879    +0.13% Euro/Norway    8.3770    8.3657    +0.14% Dollar/Sweden    6.8505    6.8373    +0.17% Euro/Sweden    9.2640    9.2480    +0.17%           All spots FX=  Tokyo spots AFX=  Europe spots EFX=  Volatilities FXVOL=  Tokyo Forex market info from BOJ TKYFX World central bank news CEN Economic Forecasts... ECON   Official rates...INT/RATE Forex Diary.......MI/DIARY   Top events........M/DIARY Diaries...........DIARY Diaries Index........IND/DIARY Press Digests.....PRESS Polls on G7 economies..SURVEY/ European markets......MARKETS/))))
  Keywords: MARKETS FOREX/