* Upbeat eurozone manufacturing data boosts euro * Dollar hobbled by uncertain timing of Fed tapering * Aussie under pressure after RBA minutes By Lisa Twaronite and Hideyuki Sano TOKYO, Dec 17 (Reuters) - The euro stayed aloft near multi-year highs against rivals on Tuesday after surprisingly strong euro zone manufacturing data, while uncertainty over when the Federal Reserve would start to reduce its economic stimulus undermined the greenback. The Fed will begin its latest two-day policy meeting on Tuesday. Most economists expect it to begin tapering its $85 billion per month in asset purchases in March, but upbeat U.S. economic data prompted some investors to bet on a reduction as early as next month, or even this week. The euro rose about 0.1 percent on the day to $1.3768 , not far from its two-year high of $1.3811 reached last week. The common currency also stayed within reach of a five-year peak against the yen, rising about 0.1 percent to 141.82 yen , while the dollar was flat at 103.00 yen, having slipped from a five-year high of 103.925 yen scaled on Friday. Uncertainty over the Fed's policy outlook pushed down the dollar index slightly to 80.051, not far from six-week lows of 79.757 hit on Wednesday. "Action in the currency market has ground to a standstill. There's very little directional impetus coming at the moment. It really is, all eyes on the Fed," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong. "Some of the momentum that we saw in some currencies, like dollar/yen, euro, sterling, it seems to have faded at the moment, which could be partly going into year-end with less liquidity and some profit-taking, which could be limiting moves," he added. U.S. economic data continued to suggest improving prospects, with industrial production posting its biggest increase in a year in November, finally pushing industrial output above its pre-recession peak. Even if the Fed does reduce its bond buying, it could signal it plans to keep rates low for a longer period, complicating the dollar's outlook further. The euro gained traction after a report on Monday showed German manufacturing activity and the flash Eurozone Composite Purchasing Managers' Index both beat forecasts in December. Still, activity in France dropped to a seven-month low, and ECB President Mario Draghi affirmed on Monday that interest rates in the region will stay low, if not lower, for longer, highlighting the still-fragile state of the euro zone economy. While many traders looked to the outcome of the Fed's meeting, the Australian dollar slumped after the release of the minutes of the Reserve Bank of Australia's Dec. 3 policy meeting. The RBA said the Aussie dollar is still painfully high despite the fact that it has weakened noticeably over the past month. Australia's government has also abandoned any intentions of returning to a budget surplus and predicted deficits for the next decade without spending cuts. The Aussie fetched $0.8940, near a 3-month low of $0.8909 set on Friday. In a recent media interview, RBA Governor Glenn Stevens said he thought $0.85 was a more reasonable level than $0.95. Against the yen, the Aussie slipped 0.1 percent to 92.10 yen , but remained above an important support level around 91.80, its 100-day moving average.

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