* Yen advances vs dollar, euro as Tokyo shares fall
* Euro underpinned by prospect of Fed rate cut next week
* Focus stays on fate of US automaker bailout
By Kaori Kaneko
TOKYO, Dec 11 (Reuters) - The yen advanced against major currencies on Thursday, recovering some of its losses from the previous day as stocks fell, making investors less risk tolerant.
Asian shares fell despite gains on Wall Street, making investors return to the relative safety of the low-yielding yen.
But market participants said currencies were unlikely to move much as trade winds down towards the year-end, with moves likely to be led by big institutional players.
"The market will mainly be driven by position adjustment at the end of the year," said Yousuke Hosokawa, treasury department senior manager at Chuo Mitsui Trust and Banking.
"As a slew of dismal economic indicators have shown, the global economy is weak. We can't yet be optimistic," he said.
The dollar fell 0.4 percent to 92.39 yen from late U.S. trading.
The euro dipped 0.2 percent to 120.50 yen after touching 121.44 yen in U.S. trade the previous day.
The European single currency climbed 0.2 percent to $1.3044 after hitting a two-week high of $1.3071 on electronic trading platform EBS on U.S. trading.
The euro was underpinned against the dollar by the prospect of the Federal Reserve cutting interest rates next week, traders said.
The currency market reacted little to the approval of a $14 billion auto industry bailout plan by the U.S. House of Representatives.
While the House stuck to its plan, uncertainty reigns in the Senate, where a razor-thin Democratic majority cannot ensure passage. A vote could come as early as Thursday, but some Republicans have vowed to slow or even block the legislation.
"The currency market has already factored in some kind of bailout being agreed. It is hard to imagine that the U.S. will let a massive number of people lose their jobs, further worsening the labour market," said Takashi Kudo, a director at NTT Smarttrade.
Tokyo's Nikkei share average slipped 0.8 percent.
Investors are likely to refrain from active trading ahead of the Fed's monetary policy meeting next week, with the central bank widely expected to cut its key interest rates and expectations for additional measures, Hosokawa of Chuo Mitsui Trust and Banking said. (Reporting by Kaori Kaneko; Editing by Hugh Lawson)