*Dollar slides, G7 reiterates familiar stance on FX
*Europe shares rise, fuelling "risk appetite"
*Aussie up as local media see chance of Tuesday rate hike
By Jamie McGeever
LONDON, Oct 5 (Reuters) - The dollar weakened on Monday after a G7 meeting at the weekend reaffirmed the market's view policymakers are comfortable with a gradually weakening dollar, a trade encouraged by the resilience in global equity markets.
The biggest beneficiary was the Australian dollar, which was also boosted by mounting speculation that the Reserve Bank of Australia may raise interest rates this week, becoming the first major country to do so.
Global stocks held up Monday despite a weak U.S. employment report on Friday. The weak jobs data suggests U.S. monetary policy will be kept ultra loose, encouraging traders to buy perceived "riskier" currencies and assets like stocks.
"Risk bounced back pretty strongly ... and that's leading to a generally softer dollar today. The market is looking to build up 'risk positions' again," said Geoff Kendrick, currency strategist at UBS in London.
"The G7 could have been a red light (to dollar selling), but there was no change," he said.
After the Group of Seven finance chiefs' meeting in Istanbul, traders bet on further dollar weakness to help redress imbalances between consumer and indebted countries like the United States and producer and saver nations like China.
At 1044 GMT the dollar index, a measure of the greenback's performance against six major currencies, was down a quarter of a percent at 76.85.
The euro climbed 0.4 percent to $1.4620, supported in part by a 0.4 percent gain in European shares, while U.S. stock futures rose 0.5 percent.
The euro recovered after sliding below $1.45 on Friday, when U.S. non-farm payrolls dropped by 263,000 in September, sparking a flurry of safe-haven dollar buying. But the euro's recovery shows little appetite for more dollar strength, analysts said.
Traders brushed off a smaller-than-expected slide in euro zone retail sales for August and other data showing the region's services economy returned to growth last month.
C.BANKS IN FOCUS
European Central Bank Governing Council member Ewald Nowotny was quoted on Monday as saying current euro levels posed no big threat and merited scrutiny but no major action. The euro also took some marginal support from Ireland endorsing the EU's Lisbon treaty in a referendum -- which may smooth decision making in the 27-nation bloc.
The Australian dollar rose 1 percent against the dollar to $0.8740, after two influential columnists wrote the RBA would probably raise rates to 3.25 percent from a record low 3.0 percent at Tuesday's policy meeting.
Still, many in the market expect the RBA is more likely to raise the cash rate from 3.0 percent in November.
The ECB and the Bank of England will also announce policy decisions this week. Both are seen holding rates on Thursday.
Focus will be on whether the BoE hints that discussions about banks' remuneration rates have advanced, while some analysts said the ECB may convey a cautiously optimistic stance on the economy.
"(The ECB's) press conference may acknowledge that activity in the euro area is tilting in a slightly more positive direction in relation to the ECB staff baseline projections although officials are still likely to warn that a "bumpy road" lies ahead," Barclays analysts wrote in a note.
The U.S. dollar was up slightly at 89.90 yen, hovering well above a recent eight-month low of 88.23 yen.
Japanese Finance Minister Hirohisa Fujii at the weekend said Japan would take action against what it perceived as excessive, one-sided moves in the yen. This helped put the brakes on dollar/yen's fall below 90 yen, traders said. (Additional reporting by Naomi Tajitsu, editing by Toby Chopra)