* Dollar edges up vs euro, barely changed vs yen
* U.S. jobs data not as bad as feared but still ugly
* Japan clocks record current account deficit in January
By Masayuki Kitano
TOKYO, March 9 (Reuters) - The dollar inched up slightly against the euro and held steady on the yen on Monday, as a record current account deficit in Japan, a gloomy economic picture in the United States and technical dynamics pulled the market in different directions.
Japan's stock market dipped to its lowest close in 26 years and its current account posted a record deficit of 172.8 billion yen ($1.76 billion) in January.
But gloomy news from the United States, in the form of the highest unemployment rate since 1983, left market participants with little hunger for the U.S. currency either.
Traders said flows were light in Asian business, with the main dollar-buying interest coming from foreign investors selling Japanese equities and dollar-selling coming in part from Japanese companies but also from proprietary trading desks.
"Technically the market is trying to look for upwards rather than downwards on dollar/yen," a senior trader at a U.S. bank said.
"But in reality the fundamentals of the (U.S.) economy are saying down ... The non-farm payrolls numbers don't give you the appetite to go to that level."
Data showed on Friday that the U.S. unemployment rate rose to a 25-year high of 8.1 percent in February as employers cut 651,000 jobs -- better than many had feared but still substantial.
The euro slipped 0.2 percent to $1.2632 and 0.2 percent to 123.98 yen.
The dollar was little changed at 98.18 yen after dipping to the day's low of 97.90 yen on trading platform EBS earlier. It has backed away from a four-month high of 99.69 set last week.
The latest data shows currency speculators on the Chicago Mercantile Exchange's International Monetary Market still held net long positions in the yen, although such positions fell to 20,070 contracts in the week ending March 3, from 28,635 the prior week.
On the charts, the dollar has forged a steady uptrend against the yen since hitting a 13-year low of 87.10 in January and many in the market are targeting a move to 100 and 102 yen.
But its push higher has lost momentum and it has retreated from a three-year high of 89.624 against a basket of six currencies also set last week, to 88.518 on Monday.
CURRENT ACCOUNT
Japan's benchmark Nikkei average fell 1.2 percent to hit a 26-year closing low, hurt in part by worries about the fate of General Motors and after Hong Kong stocks slid as hopes for further economic stimulus from China waned.
Japan's first current account deficit in 13 years came as the global financial crisis dried up demand for Japanese exports and, combined with a strong yen at the time, shrank the profits from overseas investments, including subsidiaries of its major manufacturers.
"The Japanese current account number was a big thing, turning into a deficit and larger than expected," said Masafumi Yamamoto, head of FX strategy for Japan at Royal Bank of Scotland.
"It must have a lasting impact but in the short term it was priced in." (Additional reporting by Charlotte Cooper; Editing by Chris Gallagher)