* Euro falls vs dlr on jitters ahead of U.S. jobs data
* White House spokesman says warns of 'severe' job cuts
* U.S. economy seen losing 650,000 jobs in March
* Yen turns lower vs euro, sterling gains after EZ, UK PMIs
(Adds quotes, updates prices)
By Veronica Brown
LONDON, April 3 (Reuters) - The euro fell against a broadly firming dollar on Friday, with investors displaying jitters ahead of key U.S. employment data which are expected to show the U.S. economy suffered deep job losses in March.
U.S. non-farm payrolls, due at 1230 GMT, are forecast to show a fall of around 650,000 jobs in March to take the unemployment rate to a 26 year high of 8.5 percent.
Speaking on Friday, White House spokesman Robert Gibbs warned the jobs report is likely to show "additional severe job cuts"..
"I think the market is certainly braced for a nasty figure. It's the key event risk for today and is making people all the more cautious," said Derek Halpenny, European head of FX research at BTM-UFJ in London.
Nevertheless, the euro pared earlier losses against the dollar and gained against the yen, while sterling also rose after stronger-than-expected euro zone and UK services sector data, which helped European equities to rally.
A surge in investors' risk appetite after Group of 20 leaders agreed a $1.1 trillion deal to counter the global crisis had sparked sharp gains in equities on Thursday, while the euro and other currencies seen as higher risk jumped.
"This equity market rally is going to have more legs than previous rallies we've had in the overall move down," BTM-UFJ's Halpenny said.
"If you picture a "U" shaped path for the economy, the bottom of the U went into a "V" after Lehman's (collapse). The Lehman-related shock is unwinding and that's giving a better picture on the economy, he added.
At 1107 GMT, the euro was down 0.2 percent against the dollar at $1.3428, while it rose 0.1 percent against the yen to 134.26 yen after trading in negative territory in early European trade.
The dollar also gained 0.3 percent to 99.85 yen after rising as high as 100.18 yen in early trade on EBS trading platform. The dollar's trade-weighted index was up 0.2 percent on the day at 84.486.
GREEN SHOOTS OF STABILISATION?
Friday's services sector purchasing managers' survey for the euro zone showed an unexpected upward revision to 40.9 from the 40.1 flash estimate, revealing that the sector contraction is starting to ease..
Investors were particularly encouraged by the equivalent survey for the UK services sector, which showed the index jumping to a six-month high of 45.5 from 43.2, well above forecasts for just 43.5..
Sterling gained 0.2 percent against the dollar to $1.4761, having earlier hit a seven-week high of $1.4828 after the UK data was released.
Investors continued to digest the European Central Bank's decision on Thursday to cut interest rates by 25 basis points to 1.25 percent, less than the 50 basis point cut that had been widely expected.
The ECB left the door open for more rate cuts and President Jean-Claude Trichet said it would reveal at the next meeting any unconventional monetary easing measures it might take.
"After people scrutinised Trichet's comments, expectations are growing that the ECB will lower rates again and that they will announce unconventional measures, which is a long-term negative for the euro," Nordea currency strategist Nils Christensen said.
Later in the afternoon, investors will be watching for U.S. non-manufacturing ISM data at 1400 GMT.
(Additional reporting by Jessica Mortimer)
(Reporting by Veronica Brown; Editing by Victoria Main)