* Dollar dips vs euro, sterling after hitting 2-week highs
* Yen retreats from its 2-week high vs euro before G20
* Asian shares fall on anxiety about global economy
By Satomi Noguchi
TOKYO, Nov 12 (Reuters) - The dollar dipped on Wednesday after hitting two-weeks highs against the euro and sterling, but losses were limited as investors worried about the global economic slowdown and preferred to shift funds to the world's most liquid currency.
The yen touched a two-week high against the euro earlier as investor appetite for risky assets waned further after weak economic data worldwide reinforced fears of a prolonged recession and sent Asian shares lower.
Oil prices slipped back near a 20-month low as poor corporate earnings highlighted damage from the global economic slowdown to companies and consumers.
"Dollar demand seems to be staying strong with hedge funds trying to hoard cash holdings as they prepare to face (possible redemptions at) the year-end, giving a floor to the currency's slide versus the euro," said a trader at a Japanese bank.
"In addition to such demand factors, a string of bad news about U.S. companies is encouraging short-term speculators to bet on the dollar," the trader said.
The euro rose 0.3 percent to $1.2553 after falling as low as $1.2477 earlier in the day, the lowest since Oct. 28.
Traders said charts showed the euro was likely to test a further downside towards $1.20 or $1.18 after breaking below $1.26 the previous day.
Sterling climbed 0.2 percent to $1.5410 recovering from an earlier low of $1.5347, a two-week low.
Investors are focusing on sterling as the Bank of England is expected to signal later in the day in its Inflation Report that Britain's economy has entered such a painful recession that there is a greater danger of too little inflation than too much.
The bank shocked the market last week by slashing interest rates by 150 basis points to 3 percent, their lowest since the 1950s. It justified the cut by saying the severity of the downturn meant there was now a clear risk inflation could fall below its 2 percent target.
If its projections show inflation below target on a two-year horizon if rates remain steady at 3 percent, it will send a strong signal that last week's rate cut will not be the last, possibly inflicting another blow on sterling, analysts say.
Against the yen, the euro rose 0.1 percent to 122.60 yen after touching a two-week low of 121.23 yen on EBS.
The dollar was little changed against the yen at 97.69 yen after dropping as low as 97.15 yen earlier.
Market players said the dollar and yen may not gain sharply before a G20 summit in Washington this weekend.
"Many investors would like to buy the yen but are wary of pushing through key levels ahead of the G20 summit," the trader at the European bank said.
At the Washington summit this weekend, world leaders will meet to discuss precisely what steps they need to work out in the coming months, and how much say emerging economies will have over global finance. (Additional reporting by Shinichi Saoshiro; Editing by Michael Watson)