* Dollar index steady at 78.059 <.DXY>, dollar flat vs euro
* Higher risk FX fall as investors trim long positions
* All eyes on U.S. payrolls at 1230 GMT
* Canadian dollar falls after Canadian jobs data
(Adds quotes, updates prices; changes byline)
By Jessica Mortimer
LONDON, Aug 7 (Reuters) - The dollar was steady against the
euro and a basket of currencies on Friday as market players
awaited key U.S. employment data for a gauge of the extent to
which the world's largest economy is recovering.
The data is due at 1230 GMT, with a Reuters survey
forecasting it will show 320,000 workers lost their jobs in
July, the least for any month since September when employers cut
321,000 jobs. <ECONUS>.
Ahead of the figures analysts said investors were trimming
long positions in risky assets, which weighed on perceived
higher risk currencies such as the Australian dollar and
sterling and helped push European shares down 1.1 percent
<>.
Sterling also remained under pressure after the Bank of
England surprised markets by expanding its quantitative easing
programme on Thursday, with news of large losses at the Royal
Bank of Scotland <RBS.L> also weighing on the currency.
"Investors are paring back their long risk asset positions
ahead of the U.S. data, given the potential for surprises,"
BTM-UFJ currency economist Lee Hardman said.
"But we are still in an environment where the mentality is
to buy risk on dips," he added.
At 1113 GMT, the dollar index <.DXY>, a gauge of its
performance against six major currencies, was steady at 78.059,
staying above 77.428 which was touched on Wednesday, its lowest
point in more than 10 months.
The euro was also steady against the dollar at $1.4355
<EUR=> after the European Central Bank kept interest rates at a
record low on Thursday. The euro earlier this week rose to a
2009 high of $1.4448 on trading platform EBS.
The euro showed little reaction to data showing German
industrial output unexpectedly fell by 0.1 percent
month-on-month in June [].
The news was offset by earlier figures showing German
exports surged by 7.0 percent during June, their fastest pace in
nearly three years. [].
PAYROLLS EYED
The dollar suffered a broad sell-off earlier this week,
hitting the year's lows against a number of major currencies, as
investors sought riskier assets due to better corporate earnings
and improved economic data, but analysts said the selling may be
losing steam.
"There is a sense that the market has become a little
exhausted with dollar weakness," said Daragh Maher, deputy head
of FX strategy at Calyon. "Any disappointment (in the U.S.
payroll figures) could provoke a corrective spike higher in the
dollar."
Although the payrolls number is expected to show a smaller
decline in July, the jobless rate is forecast to climb to 9.6
percent -- the highest since June 1983 -- from 9.5 percent in
June.
The dollar was down 0.2 percent at 95.26 yen <JPY=>, after
rising to a one-month high of 95.88 yen last week.
The Australian dollar fell 0.4 percent to $0.8355. Earlier
it had bounced briefly after the Reserve Bank of Australia's
upbeat comments on the economy affirmed expectations that a rate
rise in Australia will come sooner rather later.
Elsewhere, the Canadian dollar fell to a one-week low
against the U.S. dollar of C$1.0851 <CAD=D4> after data showed
Canada posted net job losses in July of 44,500, about three
times the losses expected [].
(Additional reporting by Tamawa Desai in London; Editing by
Andy Bruce)
