* Dollar index hovers near one-week lows, euro eyes $1.3600

* China tensions could take centre stage in thin trading conditions

* Aussie dollar still fragile after hitting 3-month lows

By Lisa Twaronite and Ian Chua

TOKYO/SYDNEY, Nov 27 (Reuters) - The dollar eased to a near one-month low against the euro on Wednesday, undermined by lower Treasury yields after a batch of U.S. data offered few clues to investors on the timing of when the Federal Reserve will scale back its stimulus.

Traders said market conviction was lacking given the U.S. Thanksgiving holiday on Thursday, and an absence of any data shock to drastically change expectations that the Fed will taper its bond-buying program early next year.

"We've expected it to be a pretty quiet, given the U.S. holiday, and also the dearth of key, top-tier data," said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong.

Investors were also watching developments with China, after two unarmed U.S. B-52 bombers on a training mission flew over disputed islands in the East China Sea without informing Beijing. That was in defiance of China's declaration of a new airspace defence zone that covers the skies over islands at the heart of a territorial dispute that China has with Japan.

Though currencies showed little direction reaction to the China situation, the tensions have the potential to escalate at any time and move currency pairs, particularly in thin holiday trading conditions, market participants said.

"It is bubbling away under the surface. In an environment where there's not a lot of data, then keeping one eye on geopolitics is probably going to be a good idea as well, because you never know what might come of that," Trinh added.

Renewed pressure on the greenback helped the euro hit a near one-month high of $1.3599, its highest since Oct. 31, though it failed to crack resistance at $1.3600 and was last up 0.2 percent on the day at $1.3593.

The dollar index fell as low as 80.534 and was last slightly down on the day at 80.590, well off last Thursday's one-week peak of 81.290 and moving back toward Wednesday's low of 80.532.

Against the yen, the dollar clawed back some lost ground, adding about 0.2 percent to 101.50 yen, though still shy of a six-month high of 101.91 yen reached on Monday.

U.S. data on Tuesday showed consumer confidence fell as Americans worried about their future jobs and earnings prospects, but the housing market provided a more encouraging reading with permits for future home construction rising to a near 5-1/2 year high.

The benchmark U.S. Treasury yield touched a one-week low of 2.69 percent overnight, while Fed funds futures maturing in 2015 added to gains and the December 2015 contract hit a new high, suggesting the market expects U.S. rates to stay low for longer.