* Signs of improvement in Europe support euro, sterling
* Yen on defensive as safe-haven buying unwound
* Pound near 3 1/2-yr high vs yen, 4-month high vs euro
By Hideyuki Sano
TOKYO, Sept 5 The dollar steadied just below a six-week high on Thursday after investors had booked profits on its recent gains ahead of key events, including monetary policy meetings in major economies and a crucial U.S. jobs report that could make or break the case for a reduction in U.S. stimulus this month.
The dollar index stood at 82.201 , little changed on the day and off a six-week high of 82.516 hit on Tuesday.
The euro held on to Wednesday's gains to fetch $1.3199 , after data showed euro zone businesses had their best month in over two years in August as orders increased for the first time since mid-2011.
The common currency has so far weathered a small rise in Italian bond yields after allies of Silvio Berlusconi threatened to bring down the government if the Senate voted to expel him following a tax fraud conviction.
The key focus now is the policy review by European Central Bank on Thursday, which is expected to reaffirm it will keep interest rates low to support the euro zone's fragile recovery.
"Both the euro zone and British economies seem to be improving of late. So some people who had expected more easing from Europe may be having a rethink and adjusting their positions," said Katsunori Kitakura, associate general manager of market making at Mitsui Sumitomo Trust Bank.
Sterling held firm after data showed on Wednesday the UK services sector expanded at its fastest pace in more than six years in August
The data added to growing evidence of a broad-based pick-up in the UK economy and bolstered market expectations that the Bank of England may have to tighten monetary policy well before it has indicated. The BoE is also holding its policy meeting on Thursday.
The cable stood at $1.5623 after having gained 0.8 percent so far this week.
The pound fetched 155.76 yen, within sight of a 3-1/2-year high of 156.75 yen hit in May, while the euro stood at 0.8451 pound, near a four-month low of 0.84265 pound touched on Wednesday.
Also on the horizon is the U.S. ADP private-sector jobs number due out Thursday, which could be seen as an early indicator on more important government employment report on Friday.
The data is widely perceived to be the key factor in determining whether the Federal Reserve will start reducing its stimulus at its Sept. 17-18 meeting.
The yen was on the defensive near one-month lows against the dollar after investors scaled back their safe-haven bids in part as risk assets recovered as U.S. military action against Syria was pushed back.
"It seems like the market is tentatively concluding that any military action may not last that long and its impact on the world economy will be limited. The market is coming back to business as usual," said Bart Wakabayashi, head of forex at State Street Global Markets.
The dollar held firm against the yen, trading a touch below its Aug 2 peak of 99.955 yen following three straight days of gains. It last stood at 99.755 yen .
"Despite all the talks of offers near 100 yen, the dollar was surprisingly strong over the past few days. I bet it will test the 100 yen mark soon," said State Street's Wakabayashi.
The Bank of Japan is expected to keep its policy on hold on Thursday while traders are keen to hear what Governor Haruhiko Kuroda has to say on the possibility of more easing at his press conference.