* Euro slides, weaker shares prompt profit taking
* Stellar China GDP stokes rate-tightening speculation
* Higher-yielding FX suffer as a result
(Updates throughout; previous SYDNEY/SINGAPORE)
By Naomi Tajitsu
LONDON, Jan 20 (Reuters) - The euro slipped against the dollar on Thursday as weaker global shares stifled appetite for higher-risk currencies, prompting investors to book profits on the single currency's rally to a two-month high.
European shares were pressured lower, taking a cue from weaker Asian markets after stellar economic growth in China in 2010 fuelled speculation that Beijing may come under more pressure to tighten monetary policy.
Lingering concerns about the effectiveness of an EU rescue fund for euro zone countries struggling with debt problems also helped to keep sentiment negative for the euro on Thursday.
Analysts said risk demand had cooled as investors waited to see how a visit by Chinese President Hu Jintao to the United States may affect Beijing's policy of holding down the value of the yuan. "Global equities are on the weaker side, and the China/U.S. talks are weighing on upwards risk sentiment," said Lutz Karpowitz, currency analyst at Commerzbank in Frankfurt.
He added: "There's still questions on the EFSF, and how to help debt-ridden countries," saying that this would put downward pressure on the euro in the mid-term.
In early European trade, the euro slipped 0.2 percent on the day to the day's low of $1.3420, retreating from $1.3539 hit on Wednesday, its strongest since late November.
It later trimmed losses to trade around $1.3470, unchanged on the day.
Technical analysts said the single currency would be supported around $1.3435, its 100-day moving average, while upward resistance was seen at $1.3570, the 50 percent retracement of the euro's November to January slide,.
Higher-yielding currencies including the AustralianZealand dollars were the day's biggest losers, each falling around 0.7 percent versus the dollar.
The Australian dollar is particularly sensitive to the performance of the Chinese economy as Australia is a major supplier of natural resources to the country. Speculation of higher Chinese rates tends to weaken the Aussie as such action would cool growth, decreasing demand for resources.
LIMITED EURO LOSSES?
Some in the market said euro losses may be limited for now, as sovereign demand for the single currency was seen in the lower $1.34 region.
Market participants said investors remained long of dollars despite the euro's rally in the past week or so, which resulted in natural demand to sell dollars before the end of the month.
Analysts added that a slide in U.S. Treasury yields was helping to keep a lid on demand for the U.S. currency, and that it could come under selling pressure in the near term.
The U.S. dollar stabilised in the wake of its broad slide the previous day. It held steady against a basket of currencies at 78.685, but hovered in range of a two-month low of 78.303 struck on Wednesday.
"The dollar index broke through 79, a support level that has held for over a month, which could signal the beginning of the dollar's return to a medium to long-term down trend," JPMorgan analysts said in a note.
Against the yen, the dollar was flat at 82.11 yen.
One trader said an option barrier at 83.00 yen could limit the dollar's gains in the near-term. The existence of such a barrier means options players are likely to sell the dollar if it rises towards 83.00 yen. (Additional reporting by Asia Forex Team; Editing by Toby Chopra) ((naomi.tajitsu@reuters.com; +44 207 542 5830; Reuters Messaging: naomi.tajitsu.reuters.com@reuters.net))