* 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 speechBy Shinichi SaoshiroTOKYO, March 2 (Reuters) - The dollar drooped 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 stood little changed at 90.264.The index had shed 0.4 percent overnight, peeled away from ahigh of 90.932 - its strongest since Jan. 19 - after Trumpannounced on Thursday he would impose tariffs on imported steeland aluminium.The 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.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 0.1 percent lower at 106.170 yen ,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 106.080yen, its weakest since Feb. 16.The euro was little changed at $1.2271 after rising0.6 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 anearlier broad 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 $1.3770 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 and New Zealand dollars were 0.1 percenthigher at $0.7762 and $0.7258 . (Reporting by Shinichi Saoshiro; Editing by Sam Holmes)
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