By Rae Wee

SINGAPORE (Reuters) - The dollar turned decisively higher on Tuesday as traders struggled to get a grip on the diverging growth outlooks between the world's two largest economies, though they largely shrugged off another disappointing set of Chinese trade figures.

China's imports and exports fell much faster than expected in July, data on Tuesday showed, with imports down 12.4% from a year earlier while exports contracted 14.5%, in another sign of the country's faltering economic recovery.

The yuan and the Australian and New Zealand dollars extended their falls in an initial knee-jerk reaction to the figures, but they later pared some of those losses on bets that the weak data reinforced the need for further stimulus measures from Beijing.

They were last lower on the day, weighed down by a stronger U.S. dollar.

The fell to a more than two-week low of 7.2334 per dollar, while its onshore counterpart similarly bottomed at a more than two-week low of 7.2223 per dollar.

The weakened 0.38% to $0.6549, while the slid 0.55% to $0.60735. The two Antipodean currencies are often used as liquid proxies for the .

"Those weaker exports and imports figures just underscore the weak external and domestic demand in the Chinese economy," said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:).

"I think markets have grown increasingly insensitive to disappointing Chinese economic figures ... We've got to a point where weak data will just reinforce calls for further policy support."

Elsewhere, the U.S. dollar rose broadly and eked out a 0.6% gain against its Japanese counterpart. It last stood at 143.26 yen.

Data on Tuesday showed that Japanese real wages fell for a 15th straight month in June on relentless price hikes, but nominal pay growth remained robust amid rising salaries for high-income workers and a broadening labour crunch.

While currency moves had been minimal in the early Asian day, the greenback extended its gains over the course of the trading session as risk sentiment turned fragile and Asian stocks failed to ride Wall Street's rally.

"It's become a wave of U.S. dollar buying for sure," said Sean Callow, a senior currency strategist at Westpac.

"Perhaps the market was just expecting that there would be a more upbeat tone to risk appetite today, given U.S. equities rallied."

Sterling edged 0.25% lower to $1.2753, while the euro fell 0.09% to $1.0991.

The common currency had slipped against the U.S. dollar in the previous session on news that German industrial production dropped more strongly than forecast in June.

The rose 0.18% to 102.26, edging away from a one-week low it hit on Friday in the wake of a mixed U.S. jobs report which pointed to a cooling, but still resilient labour market.

That added to hopes of a soft-landing scenario in the world's largest economy, in the face of the Federal Reserve's aggressive rate hikes.

All eyes are now on Thursday's inflation data where expectations are for core consumer prices in the United States to have risen 4.8% on an annual basis in July.

"Some will argue that U.S. growth is very robust at present, which would naturally cause greater inflation risk," said Gary Dugan, chief investment officer at Dalma Capital.

"With the Fed's interest rate policymaking remaining data dependent, every data point has been eliciting an even higher level of vigilance."