* Euro slips versus dollar as sterling tumbles
* Pound posts largest daily fall in year versus dollar
* Euro remains fragile on Greece bailout uncertainty (Updates with U.S. ISM data, updates prices)
By Wanfeng Zhou
NEW YORK, March 1 (Reuters) - The euro fell more than 1 percent against the U.S. dollar on Monday, led by a selloff in sterling and as uncertainty remained over a bailout package for debt-strapped Greece.
The pound fell to a 10-month low versus the greenback and was on track for its biggest one-day drop in a year after a poll showed increased risk that no party will win a majority in this year's general election, triggering fears decision-making would become stymied.
Having broken through the key $1.50 level, the pound dropped roughly 3 percent at one point, with traders citing selling by a UK bank after UK insurer Prudential Plc said it would buy American International Group Inc's Asian life insurance business.
Heavy selling pressure in sterling triggered a move lower in the euro, which had been steady earlier in the global session on hopes Greece may be nearing a deal with EU governments to take more budget steps in exchange for some form of emergency aid.
"The moves in euro/dollar are being largely driven by what's going on in sterling against the dollar," said Omer Esiner, senior market analyst for Travelex Global Business Payments in Washington. "We're seeing the pound down almost 2.5 percent against the dollar, and that's helping support the greenback in most of its major crosses."
In mid-morning trading, the euro fell 1 percent to $1.3486 after hitting a session low of $1.3461, according to Reuters data, not far from a nine-month low of $1.3442 last month.
The pound traded 2.1 percent lower at $1.4930 and was on track for its biggest one-day decline since March 2009. It had tumbled as low as $1.4781.
Sharp losses in the euro and sterling helped lift the ICE Futures U.S. dollar index, which tracks the greenback versus a basket of six other major currencies. The index was up 1 percent at 81.132.
The greenback showed limited reaction to data showing the U.S. manufacturing sector grew in February, although at a slower rate than expected.
"The U.S. currency is up across the board this morning, and as has been the case recently, the move is more about weakness in foreign currencies than strength in the dollar," said Vassili Serebriakov, currency strategist at Wells Fargo in New York, in a note.