FOREX-Dollar dips on growing risk appetite, US jobs eyed

* U.S. employment report at 1230 GMT in focus

* Sterling under pressure on growing political uncertainty

By Rika Otsuka

TOKYO, June 5 (Reuters) - The dollar inched down against a basket of major currencies on Friday, with investors shifting money to higher-yielding currencies on the view that the recession hitting the world's major economies is easing.

Sterling was under pressure as political uncertainty deepened in Britain with a third senior minister quitting the government on Thursday and calling on Prime Minister Gordon Brown to step down to improve his party's chances at a general election due within a year. [ID:nL4283300]

But activity in Asia was subdued as traders and investors were cautious ahead of the U.S. Labor Department's May employment report at 1230 GMT, which could dent optimism about the global economy if figures turn out much worse than expected.

"Risk aversion moves are inevitable if something happens to dampen hopes as people have been taking more risks recently," said Minoru Shioiri, a senior manager of FX trading at Mitsubishi UFJ Securities.

"But an overreaction in the market is also unlikely as players are not taking as risky positions as they did a year ago."

The dollar index, a gauge of the greenback's performance against a basket of six currencies, slipped 0.1 percent to 79.415 .DXY.

The euro edged up 0.1 percent from late U.S. trade to $1.4192 EUR=, crawling towards a five-month peak of $1.4339 hit on trading platform EBS earlier this week.

The euro rose against the dollar and the yen the previous day when the European Central Bank left interest rates steady.

The ECB also reiterated plans to buy 60 billion euros in covered bonds, moves that analysts said seemed to bolster expectations that the bank won't cut interest rates any time soon.

The Bank of England and Bank of Canada also kept their benchmark interest rates unchanged on Thursday, supporting views that the worst of the global downturn has passed. [ID:nSP355691]

Such hopes encourage investors' appetite for risk, and were keeping the yen, seen as the least risky currency, not far from multi-month lows against the euro and the Australian dollar.

The euro climbed 0.3 percent at 137.36 yen EURJPY=R a day after it rose 0.7 percent following the ECB's rate verdict. It remained within reach of a seven-month high of 138.02 yen struck on EBS on Wednesday.

The dollar was up 0.2 percent at 96.75 yen JPY=.

Sterling inched down 0.1 percent to $1.6121 GBP=D4 after falling as low as $1.6106 earlier, according to Reuters data.

Commodity-linked currencies held firm after oil hit a seven-month high and gold jumped nearly 2 percent the previous day. [O/R] [GOL/]

The Australian dollar rose 0.2 percent to $0.8032 AUD=, consolidating after a wave of profit-taking knocked down the Aussie from an eight-month high of $0.8265 hit on Wednesday.

The U.S. economy is expected to have shed 520,000 jobs in May, with the unemployment rate forecast to have risen to 9.2 percent from April's level of 8.9 percent. [ECI/US]

"Weak readings have already been factored in the currency market. In fact, the market will likely to pay more attention to how share prices react to the employment report," said Masaki Fukui, senior market economist at Mizuho Corporate Bank.

It may take a shockingly poor figures to spark risk aversion, analysts said, especially as investors are well aware that job losses will not dramatically decrease in the near term after General Motors' and Chrysler's bankruptcy filings. (Editing by Edwina Gibbs)