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

* China tensions could take centre stage in thin trading conditions

By Lisa Twaronite and Ian Chua

TOKYO/SYDNEY, Nov 27 (Reuters) - The euro rose near a one-month high against the dollar and a four-year high against the yen on Wednesday, as investors tested the upside ahead of this week's U.S. holiday.

A rise in short term market rates also helped the euro. Euro-priced bank-to-bank lending rates rose on Tuesday after the amount of extra money in the financial system fell to its lowest level in more than two years.

"The euro's rise today was mostly a positioning move, with Japanese pure commercial orders staying out at the moment," said a market analyst at a foreign exchange research firm in Tokyo.

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 U.S. Federal Reserve will taper its bond-buying program early next year. A batch of data on Tuesday offered few clues to investors on the timing of when the U.S. central bank will scale back its stimulus.

"We expected it to be 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 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 $1.3600, its highest since Oct. 31, though it failed to crack resistance at that level, and was last up about 0.2 percent on the day at $1.3592.

Against the yen, the European unit rose as high as 138.16 yen, breaking above 138.00 yen for the first time since October 2009, taking aim at the 2009 peak around 139.21 yen.

The dollar index fell as low as 80.534 and was last slightly down on the day at 80.584, well off last Thursday's one-week peak of 81.290 and moving back toward Wednesday's low of 80.532.