* Market focus shifting to U.S. jobs data
* Sterling, euro dip as dollar-short positions cut
* U.S. bank stress results remove uncertainty
By Satomi Noguchi
TOKYO, May 8 (Reuters) - The dollar gained broadly on Friday as investors turned their attention to a jobs report due later in the day for clues about the health of the U.S. economy, after bank stress test results removed a major uncertainty in financial markets.
The pound retreated from a four-month high against the dollar and the euro fell from a one-month peak versus the greenback both struck the previous day as traders reduced dollar-short positions ahead of U.S. payrolls data.
Traders said the bank test results were largely in line with expectations, and the market focus shifted to whether U.S. jobs data will show a slowing of job losses and reinforce hopes that the end of a deep global recession is near.
"The dollar's direction after the payrolls data is hard to predict because better-than-expected figures may not necessarily help the dollar, and it largely depends on the stock market reaction afterward," said a senior trader at a Japanese bank.
The dollar index, a gauge for the greenback's performance against six major currencies, rose 0.1 percent to 83.980, recovering from a six-week low of 83.424 touched on Thursday.
Sterling fell 0.3 percent to $1.4975, dropping from the previous day's high of $1.5198, its highest since Jan. 9, according to Reuters data.
Some traders said sterling's fall was exacerbated after the Telegraph newspaper reported that Britain's Financial Services Authority has began second round of stress tests on British home loan firms.
The euro lost 0.2 percent to $1.3363 as traders reduced long positions made the previous day after the European Central Bank's decision to refrain from taking more aggressive liquidity-boosting measures that could reduce the currency's value. On Thursday, the euro rose as high as $1.3471 on trading platform EBS, the highest since April 6.
The ECB said it plans to spend about 60 billion euro ($80 billion) buying covered bank bonds in a bid to stem the euro zone's economic decline. The ECB also cut its main interest rate to 1 percent, a record low.
On Thursday, a drop in new U.S. jobless claims and better German manufacturing data encouraged a sense that the economic slump is bottoming out.
That followed data for April earlier this week showing private-sector employers eliminated the fewest jobs since last November and far fewer than in March.
"The announcement of stress test results came with the best timing after market sentiment had already been improved by a slew of upbeat economic data along with a recovery of stock markets," said Yoshihisa Kanzaki, a trader at Shinkin Central Bank.
"The currency market may not be able to move so actively until seeing whether the U.S. jobs data can lend more support to that trend or not," Kanzaki said.
The dollar and the yen were earlier little changed after Washington released results of bank stress tests that showed 10 need additional capital -- a total of $74.6 billion -- to withstand heavier losses that would be likely if the recession worsened.
Against the yen, the dollar fell 0.1 percent to 98.99 yen, erasing earlier gains near a three-week high of 99.80 yen hit the previous day on EBS.
The euro dropped 0.3 percent to 132.22 yen, also sliding from a three-week high of 133.58 yen touched on Thursday.
Economists forecast a median 590,000 jobs were lost in April, a mild improvement from a loss of 663,000 jobs in March. But the unemployment rate is seen at 8.9 percent, up from 8.5 percent the previous month.. (Editing by Michael Watson)